Economy Of Cuba

The Cuban economy is fundamentally characterized as a planned economy, with the majority of economic activities conducted through state-run enterprises. This centralized economic structure reflects the country’s socialist orientation, whereby the government controls production, distribution, and pricing mechanisms across virtually all sectors. The Communist Party of Cuba exerts extensive control over the economy, maintaining significant influence over economic policies, strategic planning, and the allocation of resources. This political dominance ensures that economic decisions align closely with the party’s ideological goals and national priorities, often limiting the scope for private enterprise and market-driven dynamics. Despite these constraints, Cuba benefits from a relatively low cost of living compared to many other countries in the region. Public transportation remains inexpensive and widely accessible, facilitating mobility for the population at minimal cost. Additionally, the government subsidizes essential services such as education, healthcare, and food, which are provided at little or no direct cost to citizens. These subsidies form a critical component of Cuba’s social safety net, contributing to high literacy rates and universal healthcare coverage, although they also place substantial fiscal burdens on the state budget. Historically, Cuba’s economic growth has been weak and uneven, impeded by several structural and external challenges. High levels of labor emigration have drained the country of skilled and unskilled workers alike, reducing the domestic labor force and constraining productive capacity. The economy’s heavy dependence on imports, particularly for food, fuel, and manufactured goods, has made it vulnerable to external shocks and supply disruptions. An ongoing energy crisis, characterized by frequent shortages and reliance on aging infrastructure, has further hampered industrial and agricultural output. Moreover, foreign trade sanctions, primarily imposed by the United States, have restricted access to international markets and investment, limiting economic expansion. The tourism sector, which could serve as a vital source of foreign exchange, has also faced limitations due to these sanctions as well as global economic fluctuations. Cuba’s dual economy, consisting of a state-controlled sector and a smaller, informal private sector, has contributed to recurrent financial crises and exposed deep structural economic challenges. This bifurcation has created disparities in income and access to goods, complicating policy implementation and economic management. Since 2020, the country has been mired in an economic recession marked by high inflation rates, widespread poverty, and acute food shortages. These conditions have been exacerbated by the COVID-19 pandemic, which disrupted tourism and remittances, further straining the already fragile economy. Looking back to the 19th century, Cuba was among the most prosperous pre-industrial countries in Latin America. The island’s economy was heavily reliant on the export of primary commodities such as tobacco, sugar, and coffee, which formed the backbone of its wealth and trade relations. This agricultural export economy positioned Cuba as a key player in regional commerce and contributed to a relatively high standard of living for certain segments of its population. During the Cuban Revolution period from 1953 to 1959, under the military dictatorship of Fulgencio Batista, Cuba’s GDP per capita ranked seventh in Latin America. This statistic reflected a moderate level of economic development and industrialization relative to its neighbors. However, the benefits of this economic standing were unevenly distributed, with significant social inequalities persisting throughout the country. Throughout the Cold War, Cuba’s economy was heavily subsidized by the Eastern Bloc, particularly the Soviet Union, due to its geopolitical alignment with communist states. These subsidies constituted between 10% and 40% of Cuba’s GDP in various years, providing crucial financial support that sustained the island’s economic model. The Soviet Union supplied Cuba with oil, machinery, and favorable trade terms, enabling the continuation of state-run enterprises and social programs despite limited domestic productivity. The collapse of the Soviet Union in 1991 precipitated a severe economic downturn in Cuba, with GDP declining by approximately 33% between 1990 and 1993. This contraction reflected the sudden withdrawal of Soviet subsidies and trade preferences, forcing Cuba to confront the vulnerabilities of its economic structure. The ensuing decade, known as the Special Period, was marked by prolonged economic malaise, characterized by shortages of basic goods, energy rationing, and widespread hardship. In response to the crisis of the Special Period, the Cuban government implemented marginal liberalization measures aimed at stabilizing the economy. These included limited openings to foreign investment, encouragement of tourism, and the promotion of small-scale private enterprise. Additionally, Cuba received foreign support, most notably from Venezuela under the leadership of Hugo Chávez, which provided subsidized oil and financial assistance that helped alleviate some economic pressures. The United States has maintained an economic embargo against Cuba since 1958, motivated by ongoing geopolitical tensions stemming from the Cold War and ideological opposition to Cuba’s communist government. This embargo restricts trade, investment, and financial transactions between the two countries, significantly impacting Cuba’s ability to engage with global markets and attract foreign capital. The public sector dominates economic activity in Cuba, accounting for the vast majority of employment and production. Since the 1990s, the government has promoted the development of worker cooperatives and self-employment as part of a cautious strategy to diversify the economy and increase efficiency. These initiatives have allowed for limited private economic activity within a controlled framework, although they remain subject to extensive regulation and oversight. In 2018, Cuba enacted reforms that legalized limited private property rights and free-market activities, as well as foreign direct investment. This marked a notable shift toward economic liberalization, signaling an acknowledgment of the need to modernize the economy and attract external capital. The reforms permitted greater entrepreneurial freedom and sought to integrate Cuba more fully into the global economy, albeit within the parameters set by the state. Despite these reforms, private sector employment has been steadily decreasing since the 1980s, even as public sector employment remains high. This trend reflects the persistent dominance of state-owned enterprises and the regulatory environment that constrains private business growth. The government maintains strict control over significant private and public investment activities, requiring official approval or oversight for most initiatives, which limits market autonomy and entrepreneurial innovation. Economic data published by the Cuban government is not always independently verified, raising concerns about the accuracy and reliability of official statistics. This lack of transparency hampers Cuba’s inclusion in Latin American economic rankings and complicates comparative analyses. The absence of independent audits and the politicization of economic reporting contribute to uncertainties regarding the true state of the Cuban economy.

Since the 1870s, Cuba was recognized as one of the high-income countries in Latin America, reflecting a relatively advanced level of economic development compared to its regional neighbors. Despite this classification, the Cuban economy was marked by pronounced income inequality, with wealth concentrated in the hands of a small elite, including large landowners and foreign investors. A significant portion of the country’s capital was expatriated, as foreign companies and investors extracted profits and repatriated earnings rather than reinvesting them domestically. This pattern of capital outflows limited the potential for broader economic development and contributed to social disparities that persisted throughout the colonial and republican periods. The early decades of the 20th century witnessed rapid economic growth in Cuba, primarily fueled by the expansion of the sugar industry. Sugar exports, particularly to the United States, became the backbone of the Cuban economy, with the island emerging as one of the world’s leading sugar producers. The United States was the principal market for Cuban sugar, benefiting from preferential trade agreements and geographic proximity that facilitated the flow of goods. This export-oriented growth model generated substantial revenues and attracted foreign investment, but it also made the Cuban economy highly dependent on fluctuations in global sugar prices and vulnerable to external economic shocks. By 1958, on the eve of the Cuban Revolution, the country’s economic standing was reflected in its per-capita gross domestic product (GDP), which stood at $2,363. This figure placed Cuba in the middle range among Latin American countries, indicating a moderate level of economic development relative to the region. While this per-capita income suggested a degree of prosperity, it masked underlying inequalities and regional disparities within the country. Urban centers such as Havana experienced higher standards of living, while rural areas, especially those dependent on sugar plantations, often faced poverty and limited access to services. Health indicators during the mid-20th century also provide insight into Cuba’s social conditions. According to United Nations data from the period between 1950 and 1955, the average life expectancy in Cuba was 59.4 years. This statistic ranked Cuba 56th in the world, reflecting relatively favorable health outcomes compared to many developing nations at the time. The life expectancy figure was influenced by improvements in public health infrastructure, medical care, and sanitation, particularly in urban areas. Nonetheless, disparities in health services persisted, with rural populations often underserved. Cuba’s geographic proximity to the United States played a significant role in shaping its tourism industry during the colonial and republican eras. The island became a popular holiday destination for wealthy Americans seeking leisure and entertainment in a tropical setting. Tourism was largely centered around activities such as gambling, horse racing, and golfing, which catered to affluent visitors and contributed to the growth of Havana as a cosmopolitan city. The influx of American tourists stimulated the development of hotels, casinos, and other recreational facilities, embedding tourism as a key component of the Cuban economy. The reputation of Havana as a center of leisure and pleasure was vividly captured by the tourism magazine Cabaret Quarterly, which described the city as “a mistress of pleasure, the lush and opulent goddess of delights.” This characterization underscored Havana’s image as a vibrant and indulgent metropolis, known for its nightlife, entertainment venues, and cultural attractions. The city’s allure attracted not only tourists but also artists, musicians, and writers, contributing to a flourishing cultural scene that complemented its economic activities. Fulgencio Batista, the Cuban dictator who ruled during the 1950s, implemented plans to further develop Havana’s Malecon, a famous waterfront promenade that stretched along the city’s northern shore. Batista envisioned transforming the Malecon into a hub of tourism, with the construction of new hotels and casinos lining the walkway to attract more visitors. This initiative was part of a broader strategy to capitalize on the island’s tourism potential and generate foreign exchange earnings. However, the development also reflected the regime’s close ties to organized crime and American business interests, which played a significant role in the expansion of Havana’s gambling industry. In the late 1950s, Cuba’s oil sector was dominated by three major international oil companies: Standard Oil of New Jersey (operating under the Esso brand), Texaco, and Royal Dutch Shell. These multinational corporations controlled the exploration, refining, and distribution of petroleum products on the island, highlighting the significant foreign presence in key sectors of the Cuban economy. The dominance of these companies underscored Cuba’s reliance on foreign capital and expertise in the energy industry, while also illustrating the broader pattern of economic dependence on external actors. The oil industry was crucial for supporting domestic energy needs and the operations of other industries, including transportation and manufacturing, during this period.

On 3 March 1959, shortly after the triumph of the Cuban Revolution, Fidel Castro’s government seized control of the Cuban Telephone Company, which was then a subsidiary of the International Telephone and Telecommunications Corporation. This event marked the beginning of a sweeping campaign of nationalizations that would reshape the Cuban economy. The assets confiscated during this initial wave of nationalizations were valued at approximately US$9 billion, encompassing a wide range of industries and foreign-owned enterprises. The expropriation of the Cuban Telephone Company was emblematic of the revolutionary government’s intent to assert sovereignty over key sectors of the economy and reduce foreign influence, particularly that of American corporations. Following the revolution in 1959, the Cuban government undertook significant reforms aimed at restructuring the economic and social landscape of the country. One of the earliest fiscal policies implemented was the abolition of personal income tax, effectively rendering all salaries as net income without deductions. This measure was part of a broader effort to alleviate the financial burden on workers and redistribute wealth more equitably. Concurrently, the government initiated comprehensive subsidies for healthcare and education, making these services universally accessible to all Cuban citizens. These social programs were foundational to the revolutionary government’s strategy to garner widespread popular support, as they addressed longstanding inequalities and improved living standards for the majority of the population. The expansion of free healthcare and education became central pillars of Cuba’s social policy and contributed to the regime’s legitimacy. In May 1960, Cuba and the Soviet Union reestablished diplomatic relations, a significant development that deepened the political and economic ties between the two nations. This rapprochement occurred in the context of escalating tensions between Cuba and the United States, and it signaled a strategic alignment with the Eastern Bloc. The restoration of diplomatic ties facilitated the negotiation of trade agreements and the provision of Soviet economic assistance, which became critical to Cuba’s survival amid growing U.S. hostility. The Soviet Union’s support provided Cuba with access to vital resources and markets, enabling the revolutionary government to sustain its economic model and pursue its socialist objectives. The nationalization campaign intensified when major oil refineries operating in Cuba, including those owned by Shell, Texaco, and Esso, refused to refine Soviet oil shipments. In response to this refusal, Fidel Castro’s government moved to nationalize these refineries, thereby bringing them under state control. This action was part of a broader policy to assert control over key industries and ensure the uninterrupted supply of fuel necessary for economic development and national security. The seizure of the refineries not only consolidated state authority over the energy sector but also further antagonized the United States and Western oil companies, escalating tensions between Cuba and its northern neighbor. The United States reacted swiftly and decisively to Cuba’s nationalizations. Within days of the refinery seizures, the U.S. government completely eliminated Cuba’s sugar quota, a critical component of the island’s export economy. This punitive measure was part of a broader strategy of economic sanctions aimed at isolating the Cuban government and undermining its revolutionary agenda. President Dwight D. Eisenhower publicly characterized the elimination of the sugar quota as “economic sanctions against Cuba” and indicated that additional economic, diplomatic, and strategic measures were under consideration. The loss of the sugar quota dealt a severe blow to Cuba’s economy, as sugar exports constituted a significant portion of national revenue and foreign exchange earnings. In 1960, Cuba and the Soviet Union formalized their economic relationship by signing their first trade agreement. Under this arrangement, Cuba agreed to export sugar to the USSR in exchange for fuel and other essential commodities. This trade agreement established a vital economic partnership that provided Cuba with a reliable market for its primary export and secured the energy resources necessary for industrial and agricultural production. The agreement also marked the beginning of a long-term economic dependency on the Soviet Union, as Cuba increasingly oriented its trade and economic policies toward the Eastern Bloc. Soviet subsidies played a crucial role in financing Cuba’s expansive state budget during this period. These subsidies enabled the Cuban government to maintain extensive social programs and public services, despite the economic challenges posed by U.S. sanctions and the disruption of traditional trade relationships. However, the influx of Soviet aid did not translate into the development of a self-sustaining economy. Instead, Cuba’s economic structure remained heavily dependent on external support and vulnerable to fluctuations in Soviet policies and global markets. Nonetheless, in 1959 and the early 1960s, Cuba was still described as “a relatively highly developed Latin American export economy,” reflecting its pre-revolutionary industrial base and export capacity, even as the new socialist model was being implemented. Cuba’s primary exports during this era continued to be cigars and cigarettes, products largely manufactured through pre-industrial piecework methods. This mode of production was characterized by inefficiency and limited technological advancement, reflecting the broader challenges facing the Cuban economy. The economy exhibited a high degree of over-specialization, relying heavily on a narrow range of commodities that were primarily sold to Eastern Bloc countries. This specialization limited economic diversification and increased vulnerability to shifts in demand within the socialist trading system. The reliance on traditional export products and outdated production methods underscored the difficulties Cuba faced in modernizing its economy under the constraints of political isolation and economic embargoes. From the time of the revolution until 1990, the Cuban economy remained largely unchanged in its fundamental structure. It continued to depend heavily on Soviet aid, both economic and military, as well as on exports to the Eastern Bloc. This dependency shaped Cuba’s economic policies and strategic decisions, limiting its ability to develop an independent and diversified economic base. The persistence of this economic model reflected the broader geopolitical realities of the Cold War and Cuba’s position as a socialist state aligned with the Soviet Union. On 7 February 1962, President John F. Kennedy expanded the existing U.S. embargo against Cuba to encompass nearly all imports from the island. This expansion intensified Cuba’s economic isolation and further restricted its access to the U.S. market, which had previously been a significant destination for Cuban exports. The comprehensive embargo was a key component of U.S. efforts to pressure the Cuban government economically and politically, aiming to destabilize the revolutionary regime and curtail its influence in the Western Hemisphere. The embargo’s expansion had profound effects on Cuba’s economy, forcing the country to seek alternative trading partners and deepen its reliance on the Soviet Union. By the late 1960s, Cuba had become increasingly dependent on Soviet economic, political, and military aid. This dependence was reflected in the substantial subsidies, trade agreements, and military support provided by the USSR. Despite this reliance, Fidel Castro privately held the belief that Cuba could bypass the traditional stages of socialism and move directly toward pure communism. This ideological conviction influenced Cuba’s domestic policies and its approach to economic planning, as the government sought to accelerate the transition to a communist society without passing through intermediate phases commonly observed in Marxist-Leninist theory. Castro’s vision underscored the revolutionary zeal that characterized Cuba’s leadership during this period, even as practical economic challenges persisted. In 1973, under pressure from Soviet leader Leonid Brezhnev, Fidel Castro agreed to Cuba’s full membership in the Council for Mutual Economic Assistance (Comecon), the economic organization of socialist states led by the Soviet Union. Cuba’s accession to Comecon classified it as an underdeveloped member country within the bloc, reflecting its economic status relative to other socialist states. Membership in Comecon integrated Cuba more deeply into the socialist economic system, facilitating trade, coordination, and economic planning in line with Soviet models. This integration also provided Cuba with access to preferential trade arrangements and economic assistance from member countries. As a member of Comecon, Cuba benefited from arrangements that allowed it to obtain oil in exchange for sugar at highly favorable rates. This barter system enabled Cuba to secure essential energy supplies at prices below world market levels, which was critical for sustaining its economy and supporting industrial development. The favorable exchange rates facilitated the importation of goods from non-Comecon countries, allowing Cuba to diversify its sources of consumer and capital goods despite the constraints imposed by the U.S. embargo. Additionally, the oil-for-sugar trade supported investments in social services, reinforcing the government’s commitment to healthcare, education, and social welfare programs. The advantageous terms of trade and the re-exporting of oil provided Cuba with valuable hard currency, which was essential for financing imports from outside the Eastern Bloc. This hard currency income allowed the Cuban government to procure a wider range of goods and technologies necessary for economic development and modernization. Furthermore, the availability of hard currency enabled Cuba to sustain and expand its social development initiatives, including improvements in public health, education, and housing. These economic mechanisms underpinned Cuba’s ability to maintain its socialist model and social programs despite ongoing economic challenges and international isolation.

In 1970, as part of the Revolutionary Offensive economic campaign, Fidel Castro launched an ambitious initiative known as La Zafra, aimed at dramatically increasing sugar production to stimulate Cuba’s economy and bolster export revenues. The campaign set a formidable goal of harvesting 10 million tons of sugar, a target that symbolized both economic aspiration and revolutionary zeal. This initiative mobilized widespread participation across the Cuban population, including workers, soldiers, students, and peasants, all contributing to the harvest effort with considerable enthusiasm and dedication. Despite this massive mobilization and the significant resources allocated to the sugar sector, the country ultimately fell short of the target, producing only 7.56 million tons of sugar in 1970, a figure that was substantially below the projected harvest. Following the conclusion of the sugar harvest in July 1970, Fidel Castro publicly assumed responsibility for the failure to meet the 10 million ton goal, acknowledging the shortcomings of the campaign. However, later in the same year, his rhetoric shifted as he began to attribute the failure to the Sugar Industry Minister and the technocratic leadership overseeing the sector. Castro criticized these technocrats and scientists for their overestimation of Cuba’s production capabilities and for misallocating scarce resources. He contended that these experts had claimed to know how to achieve the 10 million ton target but ultimately failed to deliver, thereby undermining the broader economy. According to Castro, the technocrats had disproportionately absorbed resources that could have been more effectively distributed to enhance productivity in other factories and sectors, suggesting a mismanagement that hindered overall economic performance. Castro’s accusations extended to the notion that the technocrats exploited their privileged position within the economy, receiving large allocations of inputs and capital that were not justified by their results. This critique underscored a broader tension within Cuba’s centrally planned economy, where ideological commitment to revolutionary goals sometimes clashed with technical and managerial realities. The failure of La Zafra exposed the limits of Cuba’s economic model at the time, highlighting the challenges of balancing ambitious production targets with the available infrastructure, technology, and workforce skills. The episode also reflected the difficulties faced by the Cuban leadership in managing complex industrial and agricultural sectors under conditions of limited resources and external economic pressures. During this revolutionary period, Cuba distinguished itself as one of the few developing countries actively providing foreign aid to other nations, a policy that reflected its internationalist commitments and ideological solidarity with other socialist and liberation movements. This effort began in the early 1970s with the construction of six hospitals in Peru, marking the start of a broader program of Cuban assistance abroad. The Cuban government viewed foreign aid as an extension of its revolutionary mission, using its limited resources to support development projects and social programs in countries across Latin America, Africa, and Asia. This approach was unique among developing nations, many of which were recipients rather than providers of aid during this era. Between 1970 and 1985, Cuba experienced relatively high rates of economic growth, particularly in sectors aimed at satisfying basic social needs such as education and health care. This growth was achieved through a development model that aligned closely with the World Bank’s 1970s strategy of combining redistribution with economic expansion. Cuba’s emphasis on universal access to education and health services resulted in significant improvements in literacy rates, life expectancy, and overall human development indicators, setting the country apart from many other developing nations. The government’s focus on social welfare was supported by the redistribution of income and resources, which helped to reduce inequality and improve living standards for large segments of the population. Cuban foreign aid expanded significantly throughout the 1970s, with approximately 8,000 Cuban professionals and workers deployed on overseas assignments in a variety of countries. These personnel included doctors, teachers, engineers, and construction workers who contributed to development projects that ranged from health care to infrastructure. The Cuban aid program was characterized by its emphasis on human capital and technical assistance, reflecting the country’s strengths in education and health care. This deployment of skilled workers abroad also served diplomatic and strategic purposes, strengthening Cuba’s ties with allied governments and movements around the world. The scope of Cuban aid efforts during this period was extensive, encompassing the construction of housing, roads, airports, schools, and other critical infrastructure in countries such as Angola, Ethiopia, Laos, Guinea, and Tanzania. These projects were often carried out in collaboration with local governments and were designed to support national development goals and revolutionary transformations. Cuba’s involvement in these countries was not limited to technical assistance; it also included military support in some cases, particularly in Angola and Ethiopia, where Cuban troops participated in conflicts aligned with socialist and anti-colonial causes. The infrastructure projects contributed to improving living conditions and economic capacity in these nations, while also enhancing Cuba’s international profile. By the end of 1985, the cumulative impact of Cuban foreign aid was substantial, with around 35,000 Cuban workers having participated in development projects across approximately 20 countries in Asia, Africa, and Latin America. This broad geographical reach underscored Cuba’s commitment to international solidarity and its role as a key player in the global socialist movement. The presence of Cuban personnel abroad also facilitated cultural exchange and the dissemination of Cuban expertise in health, education, and technical fields. Despite the considerable costs involved, the Cuban government prioritized these internationalist efforts as integral to its foreign policy and revolutionary identity. In 1982, Cuba made a significant pledge to Nicaragua, committing over $130 million worth of agricultural and machinery equipment to support the Sandinista revolution. This aid was accompanied by the dispatch of approximately 4,000 Cuban technicians, doctors, and teachers who provided essential services and technical assistance to the Nicaraguan government. The Cuban support was instrumental in strengthening the Sandinista administration’s capacity to implement social programs and develop the country’s infrastructure during a period of intense political and military conflict. This commitment reflected Cuba’s broader strategy of backing leftist revolutionary movements in Latin America as part of its ideological and geopolitical objectives. Throughout the 1980s, Cuba continued to supply Nicaragua with substantial quantities of oil, delivering approximately 90,000 tons annually to sustain the Sandinista government. This oil support was critical given Nicaragua’s limited domestic energy resources and the economic embargoes imposed by the United States and its allies. The provision of oil not only helped to stabilize Nicaragua’s economy but also reinforced the close political and economic ties between the two countries. Cuba’s energy assistance was part of a wider pattern of economic cooperation and solidarity within the socialist bloc and among allied revolutionary regimes in the region. Despite these international commitments and domestic achievements, Cuba faced mounting economic challenges during the 1980s, particularly in managing its external debt. In 1986, the country defaulted on its $10.9 billion debt owed to the Paris Club, a group of major creditor nations. This default marked a significant turning point in Cuba’s financial relations with the international community and reflected the severe constraints on its foreign exchange earnings and economic stability. The following year, in 1987, Cuba ceased making payments on this debt altogether, further exacerbating its financial difficulties and limiting its access to international credit markets. Cuba’s struggles with debt repayment continued into the 21st century. In 2002, the country defaulted on $750 million in loans from Japan, underscoring ongoing challenges in meeting its international financial obligations. This default highlighted the persistent vulnerabilities of the Cuban economy, which remained heavily dependent on external financing and subject to the pressures of global economic conditions. The inability to service its debt obligations constrained Cuba’s capacity to invest in economic development and maintain its social programs, contributing to a prolonged period of economic hardship and adjustment.

Between 1989 and 1993, Cuba experienced a profound economic contraction, with its gross domestic product (GDP) declining by at least 35%. This sharp downturn marked one of the most severe economic crises in the nation’s history, reflecting a collapse in overall economic activity and output. The magnitude of this decline was closely tied to the sudden loss of approximately 80% of Cuba’s trading partners, a consequence of the geopolitical shifts following the dissolution of the Soviet Union and the Eastern Bloc. The abrupt severance of these long-standing trade relationships drastically reduced Cuba’s volume of imports and exports, thereby disrupting the flow of goods, capital, and resources essential to sustaining the economy. Central to the economic deterioration was the collapse of Soviet subsidies, which had previously underpinned much of Cuba’s economic stability. For decades, the Soviet Union had provided substantial financial aid, favorable trade terms, and guaranteed markets for Cuban exports, particularly sugar, which formed the backbone of the Cuban economy. The withdrawal of this support coincided with the broader economic decline, intensifying the hardships faced by the Cuban populace and government. The loss of Soviet backing not only deprived Cuba of vital economic resources but also exposed the country to the volatility of global markets, from which it had previously been shielded. Compounding these difficulties was a dramatic fall in world sugar prices. Between 1985 and 1990, sugar prices had been relatively favorable, providing a steady source of income for Cuba’s export-driven economy. However, in 1990 and 1991, global sugar prices crashed precipitously and remained depressed for the subsequent five years. This collapse severely undermined Cuba’s export revenues, as sugar constituted a significant portion of its foreign exchange earnings. Prior to this downturn, Cuba had been insulated from such fluctuations through Soviet price guarantees, which ensured stable and predictable returns regardless of global market conditions. The loss of these guarantees forced Cuba to confront the full impact of market volatility, further destabilizing its economic framework. In the aftermath of this economic freefall, signs of recovery began to emerge after 1998. This resurgence was largely driven by a rapid improvement in trade and diplomatic relations with Venezuela, marking a new phase in Cuba’s international economic engagement. The election of Hugo Chávez in Venezuela in 1998 proved pivotal, as his administration quickly became Cuba’s most important trading partner and diplomatic ally. Under Chávez’s leadership, Venezuela provided Cuba with critical economic support, including subsidized oil supplies and increased bilateral trade, which helped to alleviate some of the pressures caused by the earlier loss of Soviet assistance and the depressed sugar market. This alliance facilitated a partial economic stabilization and allowed Cuba to gradually rebuild its economy following the depths of the crisis. The period of economic crisis from 1991 to 1994 came to be known as the “Special Period in Peacetime,” a term later shortened simply to the “Special Period.” This designation reflected the extraordinary nature of the economic hardships faced by Cuba in a time of peace, distinguishing it from crises associated with war or external conflict. The Special Period was characterized by widespread shortages of food, fuel, and other essential goods, as well as significant disruptions to daily life and economic activity. It represented a fundamental challenge to the Cuban government’s ability to maintain social and economic stability in the face of unprecedented external shocks. A study published in the Canadian Medical Association Journal analyzed the famine conditions experienced in Cuba during the Special Period, attributing them to political and economic factors similar to those observed in North Korea during the mid-1990s. The research highlighted how authoritarian regimes, including Cuba’s, denied ordinary people adequate access to food, prioritizing the needs of elite classes and the military over the broader population. This political prioritization contributed to the collapse of public food distribution systems, exacerbating food shortages and creating famine-like conditions across the country. The study underscored the role of state policies in shaping the severity and distribution of hunger during this time. During the Special Period, the collapse of public food distribution systems led to widespread scarcity, with the government allocating limited food supplies primarily to elite sectors and military personnel. This selective distribution intensified the hardships faced by ordinary Cubans, many of whom struggled to secure sufficient nourishment. Reports from the era describe extreme survival measures undertaken by the population, including the consumption of unconventional and desperate food sources. Notably, some residents resorted to eating animals from the Havana Zoo, as well as domestic cats, reflecting the severity of the food crisis and the lengths to which people went to stave off starvation. Despite the severe economic difficulties and widespread food shortages, the collapse of centrally planned economies in the Soviet Union and Eastern Europe had a pronounced impact on the average daily caloric intake of Cubans. Data indicate a significant decline from an average of 3,052 calories per day in 1989 to approximately 2,600 calories per day by 2006. This reduction in caloric intake reflected the sustained challenges in food availability and nutrition that persisted well beyond the initial crisis years. The decline in nutrition had long-term implications for public health and the overall well-being of the Cuban population, highlighting the enduring effects of the Special Period on daily life. Despite these nutritional challenges and economic hardships, mortality rates in Cuba were not strongly affected during the Special Period. This relative stability in health outcomes was largely attributed to the Cuban government’s efforts to maintain a robust social safety net and prioritize public health initiatives. The state continued to emphasize universal healthcare access, disease prevention, and health education, which helped mitigate the potential rise in mortality that might have otherwise accompanied such a severe economic crisis. These efforts underscored the resilience of Cuba’s public health system even in the face of profound economic adversity.

Between 1994 and 2011, the Cuban government implemented a series of economic reforms aimed at addressing multiple structural challenges, including excess liquidity within the economy, insufficient labor incentives, and persistent shortages of food, consumer goods, and services. These reforms were designed to stabilize the economy following the severe contraction experienced during the early 1990s Special Period, which was precipitated by the collapse of the Soviet Union and the loss of its economic support. The government sought to introduce measures that would not only alleviate immediate scarcities but also promote sustainable economic recovery and growth by adjusting the rigidities inherent in the centrally planned system. A central component of the reform strategy involved opening the Cuban economy to international tourism, which was identified as a vital source of foreign exchange earnings. To facilitate this, the government permitted foreign investment in the tourism sector and other areas of the economy, marking a significant departure from previous policies that had severely restricted foreign capital. Additionally, the Cuban government legalized the use of the U.S. dollar in transactions, which allowed for greater liquidity and facilitated international trade and tourism-related activities. Complementing these changes, self-employment was authorized in approximately 150 occupations, providing opportunities for private enterprise and small-scale entrepreneurship that had been largely suppressed under the previous economic model. This expansion of the private sector was intended to create labor incentives and increase the availability of goods and services. However, the policy of legalizing the U.S. dollar underwent partial reversal in subsequent years. While the dollar ceased to be accepted as a medium of exchange in Cuban businesses, it remained legal for Cuban citizens to hold the currency. This adjustment reflected concerns about the dollar’s impact on the domestic economy, including inflationary pressures and distortions in pricing and wage structures. Despite this partial rollback, the initial legalization of the dollar had a notable impact on economic activity during the reform period. The cumulative effect of these reforms was modest economic growth throughout the period from 1994 to 2011. The liberalization of certain sectors and the opening to foreign capital helped to stabilize the economy and gradually improve production and consumption levels, although the recovery was uneven and faced ongoing challenges. In October 1994, a significant reform was introduced in the agricultural sector with the liberalization of markets. This policy allowed both state-run and private farmers to sell their production above established quotas at free market prices, rather than being restricted to state-determined prices. This change expanded the range of legal consumption options available to the Cuban population and contributed to reducing the prevalence and profitability of black market transactions, which had flourished amid shortages and rationing. By enabling producers to benefit directly from surplus production, the reform aimed to incentivize increased agricultural output and improve food availability. In parallel with market liberalization, the Cuban government sought to reduce subsidies to unprofitable enterprises as part of broader fiscal consolidation efforts. To address excess liquidity and inflationary pressures, authorities contracted the money supply, which contributed to a significant decline in the semi-official exchange rate of the Cuban peso. The exchange rate, which had peaked at 120 pesos to the U.S. dollar in the summer of 1994, fell sharply to 21 pesos per dollar by the end of 1999. This adjustment reflected a move toward correcting currency overvaluation and improving the balance of payments situation. Cuba’s gross domestic product (GDP) growth during this period exhibited fluctuations that mirrored the challenges and partial successes of the reform process. In 1994, the economy grew by a modest 0.7%, followed by a more robust expansion of 2.5% in 1995 and a significant surge of 7.8% in 1996. However, growth decelerated to 2.5% in 1997 and further slowed to 1.2% in 1998. This slowdown was largely attributed to the failure to recognize and address the unprofitability of sugar production, a sector that had historically been a cornerstone of the Cuban economy but had become increasingly inefficient and uncompetitive in the post-Soviet era. Fidel Castro himself later acknowledged that mistakes had been made during the Special Period, particularly regarding the sugar industry’s decline. He questioned why the government had not recognized the sector’s unviability earlier, especially given the clear economic signals such as the collapse of the Soviet Union, oil prices stabilizing at around $40 per barrel, and persistently low international sugar prices. This admission underscored the difficulties faced by Cuban policymakers in adapting to rapidly changing global economic conditions. Despite some economic recovery, living conditions in 1999 remained significantly below the levels experienced in 1989, prior to the onset of the Special Period. The decade-long crisis had resulted in declines in income, consumption, and access to basic goods and services, reflecting the depth of the economic contraction and the limits of the reforms implemented up to that point. An examination of the historical evolution of Cuba’s GDP per capita, drawing on data from the Maddison Project and Cuban statistical sources, reveals a relative decline compared to other Caribbean countries over time. While Cuba had once been among the more prosperous nations in the region, the economic difficulties of the 1990s and early 2000s contributed to a relative erosion of its economic standing within the Caribbean. Tourism emerged as a key driver of economic recovery during this period. The growth of the tourism sector contributed to an increase in GDP, with official government data indicating a 6.2% rise in 1999. This upward trend accelerated in subsequent years, with GDP growth reaching 11.8% in 2005. The expansion of tourism not only generated foreign exchange revenues but also stimulated related industries such as construction, transportation, and services, thereby supporting broader economic revitalization. By 2007, Cuba’s economy had grown by 7.5%, surpassing the average growth rate of Latin America as a whole. Over the period from 2004 to 2007, cumulative GDP growth reached an impressive 42.5%, reflecting the impact of ongoing reforms, increased tourism, and improved economic management. This period marked one of the most sustained phases of economic expansion in Cuba since the onset of the Special Period. Beginning in 1996, the Cuban government introduced income taxes on self-employed individuals, marking a shift in fiscal policy aimed at formalizing and regulating the burgeoning private sector. This measure was part of broader efforts to integrate self-employment into the official economy, generate government revenue, and ensure compliance with tax obligations. Historically, Cuba’s economic position within the Caribbean region had experienced significant changes. In 1958, prior to the Cuban Revolution, the country ranked third in the Caribbean in terms of GDP per capita, trailing only Venezuela and Uruguay. However, by 2007, Cuba’s ranking had fallen to between ninth and twelfth place, depending on the data source and method of calculation. This decline reflected the cumulative impact of economic challenges, including the Special Period crisis and slower growth relative to regional peers. Despite these economic difficulties, Cuban social indicators such as literacy rates, healthcare access, and life expectancy experienced comparatively less deterioration. The government’s continued emphasis on social programs helped to mitigate the social impact of economic contraction and preserve key aspects of human development. The international context of Cuba’s economic challenges was further complicated by the ongoing U.S. economic embargo. The United Nations General Assembly has annually voted on resolutions calling for the lifting of the embargo, with overwhelming support for Cuba’s position. Notably, in 2016, the United States abstained from voting on the resolution for the first time since 1992, having previously voted against it alongside Israel. This shift was seen as a significant diplomatic development in the longstanding dispute over the embargo. In its 2020 report, the Cuban government estimated that the total economic cost of the U.S. embargo since its inception amounted to approximately $144 billion. This figure underscored the profound and sustained impact of the embargo on Cuba’s economic development and its efforts at recovery and reform during the period from 1994 to 2011.

In December 2010, President Raúl Castro underscored the critical state of Cuba’s economy by declaring, “Either we change course or we sink,” a stark acknowledgment of the urgent need for comprehensive economic reforms. This statement marked a pivotal moment, signaling a departure from the long-standing centrally planned economic model and a willingness to implement significant structural changes. The following year, in 2011, Cuba embarked on a series of transformative economic reforms that collectively constituted what the Brookings Institution termed the “New Cuban Economy.” These reforms aimed to introduce market-oriented mechanisms within the socialist framework, seeking to enhance productivity, stimulate private enterprise, and reduce the inefficiencies associated with state control. One of the most notable outcomes of the reform process was the dramatic increase in private entrepreneurship. Since the reforms began, over 400,000 Cubans registered as entrepreneurs, reflecting a substantial shift toward private enterprise and self-employment. This surge in entrepreneurial activity represented a departure from decades of state monopoly over economic activities, allowing individuals greater autonomy in managing businesses and generating income. By 2012, the Cuban government officially recognized 181 occupations that were no longer under exclusive state control. These included a diverse array of roles such as taxi drivers, construction workers, and shopkeepers, illustrating the broad scope of the reforms in decentralizing economic functions. The reforms also extended to less conventional occupations, where workers in certain sectors were required to obtain licenses to operate legally. For instance, individuals working as mule drivers, palm-tree trimmers, or well diggers had to purchase licenses, signaling the government’s intent to regulate and formalize private economic activities while encouraging increased privatization. Despite this growing privatization, the Cuban state maintained control over key nationalized companies responsible for the distribution of essential amenities. These entities continued to provide critical public services such as water and power supply, as well as healthcare and education, ensuring that fundamental social needs remained accessible to the population. The Cuban economy had faced significant challenges even before the reforms. Around the year 2000, approximately half of the country’s sugar mills were closed, reflecting a marked decline in the historically vital sugar industry. This contraction underscored the need for economic diversification and modernization. Prior to the reforms, Cuba’s economic imbalances were evident, with imports consistently double the value of exports. The average monthly wage for doctors was approximately £15, a figure that highlighted the low remuneration levels across many professions. To supplement their incomes, many Cuban families engaged in additional jobs or informal economic activities, underscoring the limitations of the state-controlled economy in meeting the population’s financial needs. The post-reform period saw significant changes in agricultural policy, with over 150,000 farmers gaining the ability to lease land from the government for the production of surplus crops. This move promoted agricultural privatization by granting farmers usufruct rights, thereby incentivizing increased productivity and diversification in food production. Real estate transactions, which had previously been limited to property swaps, were legalized, leading to a burgeoning real estate market. This legalization facilitated the buying and selling of homes and contributed to a real estate boom, reflecting a broader trend toward market liberalization within the Cuban economy. The growth of small private enterprises became increasingly visible in urban areas. For example, in 2012, La Pachanga, a fast-food restaurant in Havana that began operations in the owner’s home, served approximately 1,000 meals on a single Saturday, charging £3 per meal. This example illustrated the expansion of small-scale private businesses catering to both locals and tourists, signaling a diversification of the economy beyond traditional state-run sectors. Tourism also benefited from the reforms, with new offerings such as factory steam locomotive rides through closed sugar mills becoming available. These tours not only attracted visitors but also represented private sector engagement with Cuba’s historical industrial sites, blending cultural heritage with economic opportunity. Technological and consumer goods policies also evolved during this period. In 2008, Raúl Castro’s administration hinted at legalizing the purchase of consumer electronics such as computers, DVD players, and microwaves, although monthly wages remained low, typically below 20 U.S. dollars. Telecommunications saw a notable liberalization in the same year when mobile phones, previously restricted to foreign workers and government officials, were legalized for broader public use. This expansion of telecommunications access was a significant step in modernizing Cuba’s communication infrastructure and integrating the population into global networks. In 2010, Fidel Castro publicly acknowledged the unsustainability of the Soviet-style centralized planning model, aligning with Raúl Castro’s reformist stance. Both brothers advocated for a cooperative form of socialism that emphasized reduced state intervention and the development of worker-owned cooperatives and self-employment enterprises. This ideological shift aimed to preserve the socialist identity of the Cuban state while adapting economic practices to contemporary realities and improving efficiency. On 18 April 2011, Cuba’s Sixth Congress approved an extensive set of reforms designed to address longstanding economic distortions. These reforms included expenditure adjustments in sectors such as education, healthcare, sports, and culture, aiming to optimize resource allocation without compromising social services. Employment restructuring sought to reduce inflated payrolls in the public sector and to boost employment in the non-state sector, thereby enhancing labor market flexibility. The legalization of 201 different personal business licenses expanded the scope of permissible private economic activities, while the leasing of fallow state land to residents under usufruct rights encouraged agricultural productivity. Further measures introduced incentives to promote non-state employment and to re-launch self-employment initiatives, alongside proposals for the formation of non-agricultural cooperatives. The legalization of private sale and ownership of homes and cars was a significant departure from previous restrictions, granting citizens greater control over personal assets. State firms were granted greater autonomy to improve efficiency and responsiveness to market conditions. Strategies aimed at achieving food self-sufficiency included reducing universal rationing and targeting aid to the poorest segments of the population, reflecting a more nuanced approach to social welfare. The reforms also allowed for the rental of state-run enterprises, including restaurants, to self-employed individuals, facilitating public-private partnerships and diversifying economic management. A clear separation of state and business functions was established to reduce conflicts of interest and improve governance. Tax policies were updated to reflect the new economic realities, and travel restrictions for Cubans were eased, allowing greater mobility. Additionally, strategies for external debt restructuring were proposed to improve Cuba’s fiscal sustainability. On 20 December 2011, a new credit policy was implemented, enabling Cuban banks to finance entrepreneurs, individuals for major purchases, home improvements, and farmers. This policy built upon existing credit provisions that had been extended to farm cooperatives and recipients of farmland since 2008, thereby expanding access to capital for private and cooperative economic actors. Despite these reforms, the rationing system known as the Libreta de Abastecimiento continued as of 2012. Ration books distributed at local bodegas provided essential goods such as rice, oil, sugar, and matches, often at prices above the government’s average wage of £15 per month, underscoring ongoing challenges in ensuring affordable access to basic necessities. As of 2012, Cuba’s public debt stood at 35.3% of GDP, inflation was recorded at 5.5%, and GDP growth was approximately 3%. These figures, however, required updates to reflect subsequent economic developments. In September 2013, Raúl Castro signed Law 313, establishing the Mariel Special Economic Zone, Cuba’s first zone exempt from standard economic legislation. Located in the port city of Mariel, this zone was designed to attract foreign investment and promote export-oriented industrial development by offering regulatory and fiscal incentives distinct from the rest of the country. On 22 October 2013, Cuba announced plans to end its dual-currency system, a long-standing feature of the economy that had created distortions and inefficiencies. The convertible peso (CUC) ceased issuance on 1 January 2021, with circulation ending on 30 December 2021, marking a significant step toward monetary unification and economic normalization. The socialist social policy that had facilitated social advancement for underprivileged classes faced challenges due to economic crises and persistently low wages, which contributed to increasing socio-economic disparities within Cuban society. The Cuban National Bureau of Statistics (ONE) reported that social inequalities were becoming more visible, with Afro-Cubans particularly disadvantaged. Data indicated that 58% of white Cubans earned less than $3,000 annually, compared to 95% of Afro-Cubans, who also received limited remittances from the Cuban-American community in South Florida. Remittances played a crucial role in the development of the private sector, especially in lucrative industries such as restaurants and lodging, which were predominantly operated by white Cubans, highlighting racial and economic disparities. In February 2019, Cubans approved a new constitution that granted rights to private property and expanded access to free markets while maintaining the country’s socialist identity. This constitutional reform reflected the ongoing balancing act between economic liberalization and ideological continuity. The 16th ExpoCaribe trade fair, held in Santiago in June 2019, exemplified the increased trade activity and efforts to integrate Cuba more fully into regional and global markets. Since 2014, Cuba experienced a significant rise in foreign investment despite deteriorating relations with the United States. By November 2019, the country reported 525 foreign direct investment projects, more than doubling the 246 projects recorded in 2014. This growth underscored Cuba’s efforts to attract external capital to stimulate economic development. In February 2021, the Cuban Cabinet authorized private initiatives in over 1,800 occupations, further expanding opportunities for private sector participation and entrepreneurship. However, the Cuban economy faced severe setbacks due to the COVID-19 pandemic and additional sanctions imposed by the Trump administration. In 2020, the economy contracted by 11%, marking its worst decline in nearly 30 years. This contraction resulted in widespread shortages of basic goods and heightened economic difficulties for the Cuban population, underscoring the vulnerability of the nation’s economy to external shocks and internal structural challenges.

Raúl Castro’s administration undertook a comprehensive initiative aimed at restructuring Cuba’s international debt and securing forgiveness for loans and obligations owed to various creditor nations. These debts, many of which reached into the billions of dollars, had accumulated primarily during the 1970s and 1980s under the leadership of Fidel Castro. The Cuban government faced significant challenges due to the long-overdue nature of these debts, which had lingered unpaid for decades, straining Cuba’s financial relations with multiple countries and international creditors. This restructuring effort was part of a broader strategy to alleviate the economic pressures on Cuba, improve its creditworthiness, and facilitate renewed access to international financial markets. A significant milestone in this debt restructuring process occurred in 2011 when China forgave $6 billion of debt owed by Cuba. This substantial debt relief markedly reduced Cuba’s financial obligations to China, one of its key international partners, thereby easing the country’s overall debt burden. The debt forgiveness from China not only provided immediate fiscal relief but also symbolized the strengthening of bilateral relations between the two nations. This move was particularly impactful given China’s role as a major creditor and trading partner, and it underscored China’s willingness to support Cuba’s economic stabilization efforts during a period of global financial uncertainty. In 2013, further progress was made when Mexico’s Finance Minister, Luis Videgaray, publicly announced an agreement concerning a longstanding loan issued by Mexico’s foreign trade development bank, Bancomext. This loan, which had been extended more than fifteen years earlier, was valued at $487 million. Under the terms of the agreement, Mexico consented to waive approximately 70% of this amount, equating to around $340.9 million. The remaining balance of $146.1 million was scheduled to be repaid by Cuba over a ten-year period. This arrangement represented a pragmatic compromise that acknowledged Cuba’s financial difficulties while maintaining the possibility of debt recovery for Mexico. It also reflected a broader trend of creditor countries adopting flexible approaches to Cuba’s debt obligations to foster improved economic cooperation. The following year, in 2014, Russia undertook a major debt relief initiative by forgiving over 90% of Cuba’s debt to the Russian Federation, which totaled approximately $32 billion. This forgiveness translated into a debt write-off of nearly $28.8 billion, with the remaining $3.2 billion to be repaid by Cuba over a decade. This significant debt reduction was finalized shortly before Russian President Vladimir Putin’s diplomatic visit to Cuba, highlighting the strategic and symbolic importance of the agreement. The debt forgiveness by Russia not only alleviated a substantial portion of Cuba’s external liabilities but also reinforced the historical ties between the two countries, dating back to the Soviet era. It demonstrated Russia’s willingness to support Cuba’s economic recovery and maintain its influence in the Caribbean region. In 2015, Cuba entered into negotiations with the Paris Club, a group of 14 creditor countries, regarding its outstanding debt of $11.1 billion. The Paris Club, an informal group of official creditors, is known for coordinating debt restructuring agreements with debtor nations. By December of that year, a landmark agreement was reached whereby the Paris Club members consented to forgive $8.5 billion of Cuba’s total debt. This forgiveness was primarily accomplished through waivers of accumulated interest, service charges, and penalties that had accrued over more than twenty years of non-payment. The agreement represented a significant breakthrough in resolving Cuba’s longstanding debt issues with Western creditors and was viewed as a critical step toward normalizing Cuba’s international financial relations. The 14 countries involved in the Paris Club agreement included Austria, Australia, Belgium, Canada, Denmark, Finland, France, Italy, Japan, Spain, Sweden, Switzerland, the Netherlands, and the United Kingdom. These nations collectively represented a diverse group of major economies with historical financial claims against Cuba. Their participation underscored the international consensus on the need to address Cuba’s debt situation pragmatically. The involvement of such a broad coalition of creditor countries also reflected the complexity of Cuba’s debt portfolio and the importance of multilateral cooperation in achieving debt relief. Under the terms of the 2015 Paris Club agreement, Cuba committed to repaying the remaining $2.6 billion over an 18-year period. Annual payments were scheduled to be due by October 31 each year, beginning with relatively modest installments at 1.6% of the total debt. These payments were structured to gradually increase over time, reaching 8.9% of the debt by the year 2033. This graduated repayment schedule was designed to accommodate Cuba’s limited fiscal capacity while ensuring a clear path toward full repayment. The long-term nature of the agreement provided Cuba with predictable financial obligations, facilitating better economic planning and stability. Interest on the debt was forgiven for the initial five-year period from 2015 to 2020, significantly reducing the financial burden during the early years of repayment. Following this interest-free interval, only 1.5% of the total debt would remain due as interest charges. This concession was critical in making the debt service manageable for Cuba, especially given its ongoing economic challenges. The structure of the agreement thus balanced creditor interests with Cuba’s need for financial relief, promoting sustainable debt servicing without imposing excessive strain. The agreement also incorporated a penalty clause to incentivize timely payments. Should Cuba fail to make scheduled payments by October 31 of any given year, the overdue amount would incur a 9% interest rate, in addition to late interest charges on arrears. This provision aimed to protect creditor countries from prolonged defaults and encourage compliance with the repayment schedule. It underscored the seriousness with which the Paris Club approached the enforcement of the agreement while allowing for some flexibility in response to Cuba’s economic circumstances. The Cuban government regarded the Paris Club debt agreement in a positive light, viewing it as a crucial mechanism to resolve longstanding financial disputes and improve the country’s international economic standing. Cuban officials emphasized that the agreement would help restore business confidence, attract foreign direct investment, and facilitate access to European credit lines. These outcomes were seen as essential for Cuba’s broader economic modernization efforts and integration into the global economy. The debt relief was thus not only a financial reprieve but also a strategic opportunity to enhance Cuba’s economic prospects and international partnerships. In 2018, during a diplomatic visit to Cuba, Nguyễn Phú Trọng, General Secretary of the Communist Party of Vietnam, formally wrote off Cuba’s official debt to Vietnam, which amounted to $143.7 million. This debt forgiveness further exemplified the support Cuba received from its traditional allies and ideological partners. The cancellation of this debt reinforced the close bilateral relationship between Cuba and Vietnam and contributed to Cuba’s ongoing efforts to reduce its external liabilities. It also highlighted the role of political solidarity in shaping debt relief arrangements among socialist and developing countries. Despite these debt relief efforts, Cuba faced renewed challenges in meeting its repayment obligations. In 2019, the country defaulted once again on its Paris Club debt. Of the approximately $80 million due that year, Cuba made only a partial payment, leaving an outstanding balance of $30 million unpaid. This default reflected continuing economic difficulties within Cuba, including the impact of external factors such as U.S. sanctions and internal structural constraints. The partial payment underscored the fragility of Cuba’s financial situation and the ongoing challenges in adhering to international debt commitments. Cuban Deputy Prime Minister Ricardo Cabrisas acknowledged the difficulties in fulfilling the country’s debt obligations in a letter addressed to Odile Renaud-Basso, president of the Paris Club. In this correspondence, Cabrisas explained that Cuba was unable to meet its commitments due to prevailing circumstances but expressed the government’s intention to settle the arrears by May 31, 2020. This communication demonstrated Cuba’s willingness to engage transparently with its creditors and seek mutually agreeable solutions despite financial hardships. It also reflected the diplomatic efforts undertaken by Cuba to maintain constructive relations with the Paris Club members. However, by May 2020, with payments still outstanding, Deputy Prime Minister Cabrisas formally requested a moratorium on debt payments for the years 2019, 2020, and 2021. The Cuban government proposed to resume payments beginning in 2022, contingent on improved economic conditions. As of August 2023, Cuba had not resumed payments, and negotiations were ongoing to establish a new payment schedule. This prolonged delay highlighted the persistent economic challenges faced by Cuba, including the compounded effects of international sanctions, the global COVID-19 pandemic, and internal economic constraints. The continued dialogue between Cuba and its creditors indicated a shared interest in finding a sustainable path forward for debt servicing while acknowledging the country’s limited fiscal capacity.

As of 2011, Cuba’s electricity generation was overwhelmingly dependent on fossil fuels, with approximately 96% of its electricity produced from non-renewable energy sources. This heavy reliance underscored the country’s limited diversification in energy production and its vulnerability to fluctuations in fossil fuel supply and prices. The predominance of fossil fuels in the energy mix reflected Cuba’s historical energy infrastructure, which had been developed primarily around oil and coal-fired power plants, with minimal integration of renewable energy technologies at that time. In an effort to address energy challenges, particularly in rural areas where access to reliable electricity was often inconsistent, solar panels were introduced as an alternative energy source. These installations aimed to mitigate frequent blackouts and brownouts that disrupted daily life and economic activities. By promoting solar energy, the Cuban government sought not only to improve energy access in remote communities but also to reduce the widespread use of kerosene lamps, which posed health risks and environmental concerns. The adoption of solar panels represented an early step towards cleaner energy alternatives and energy decentralization in the country’s rural sectors. Energy conservation became a national priority, with citizens encouraged to replace inefficient incandescent lamps with newer, energy-efficient models. This initiative was part of a broader campaign to reduce electricity consumption and improve energy efficiency across the population. Complementing these efforts, the government implemented a power tariff system designed to discourage wasteful electricity use by imposing higher charges on excessive consumption. These measures aimed to foster a culture of energy awareness and reduce the strain on Cuba’s fragile electricity grid. In 2007, Cuba’s electricity production was estimated at 16.89 billion kilowatt-hours (kWh), while consumption stood at 13.93 billion kWh. Notably, the country neither exported nor imported electricity during that year, indicating a self-contained energy system without cross-border electricity trade. This self-sufficiency, however, was challenged by the limitations of domestic energy resources and infrastructure, which constrained the ability to meet growing demand and maintain stable supply. A distinctive feature of Cuba’s energy landscape was the significant role played by maritime energy infrastructure. Approximately 25% of the country’s electricity generation occurred on ships equipped with floating power plants, known as powerships. These vessels, anchored near the coast, burned fuel oil to produce electricity and served as a flexible and rapid-response solution to augment the national grid. The reliance on powerships highlighted both the innovative adaptation to resource constraints and the ongoing challenges in expanding land-based power generation capacity. By 2023, the fleet of powerships supplying electricity to Cuba had expanded to include eight vessels from Turkey, collectively providing 770 megawatts (MW) of power. These Turkish powerships operated by burning oil, contributing a substantial portion of the country’s electricity production. Their deployment represented a strategic partnership and an important component of Cuba’s efforts to stabilize its energy supply amid persistent resource limitations and infrastructural challenges. The Energy Revolution, launched in 2005, constituted a comprehensive national program aimed at transforming Cuba’s energy sector. This initiative sought to enhance the country’s socioeconomic development by promoting energy efficiency and diversifying energy resources. The program emphasized the transition towards a more sustainable and resilient energy economy, integrating renewable sources, improving energy conservation, and modernizing infrastructure. The Energy Revolution reflected the government’s recognition of the critical role that energy played in national development and its commitment to overcoming systemic challenges. Despite these efforts, Cuba’s energy sector continued to face significant limitations, primarily due to insufficient domestic resources necessary for optimal power production. These challenges were exacerbated by ongoing trade sanctions imposed by the United States, which restricted access to international investment, technology, and fuel supplies. The sanctions hindered Cuba’s ability to modernize its energy infrastructure and expand capacity, thereby constraining economic growth and energy security. Multimillion-dollar investments were made across various power resources in an attempt to address these constraints. However, the country still experienced rolling blackouts as a method to conserve electricity during periods of economic crisis. These blackouts affected both residential and industrial consumers, disrupting daily life and economic productivity. The persistence of power outages underscored the fragility of Cuba’s energy system and the difficulties in achieving a reliable and consistent electricity supply. A major obstacle to the country’s energy stability was the outdated electricity grid, which suffered extensive damage during hurricanes in 2004. The destruction caused by these natural disasters severely impaired the transmission and distribution infrastructure, leading to prolonged energy crises. Although efforts to repair and modernize the grid were undertaken, by 2009 the system had only been restored to approximately 90% of its pre-hurricane capacity. The incomplete recovery left the grid vulnerable to further disruptions and limited the ability to support increased electricity demand. To mitigate energy shortages and improve access, the Cuban government distributed a wide range of energy-saving and generation resources across the country. These included 6,000 small diesel generators, 416 fuel oil generators, and 893 additional diesel generators to provide localized power generation capacity. In an effort to reduce electricity consumption, approximately 9.4 million incandescent bulbs were replaced with energy-saving lamps. The distribution also extended to household appliances aimed at improving energy efficiency and reducing fuel use, such as 1.33 million fans, 5.5 million electric pressure cookers, and 3.4 million electric rice cookers. Additionally, 200,000 electric water pumps, 2.04 million domestic refrigerators, and 100,000 televisions were provided to households, reflecting a comprehensive approach to modernizing energy use and enhancing living standards. Despite these measures, Cuba frequently experienced rolling blackouts primarily caused by fuel shortages. The lack of adequate fuel supplies led to the shutdown of many power plants, further exacerbating the electricity deficit. These fuel constraints were a recurring issue, linked to both economic difficulties and the impact of international sanctions, which limited the country’s ability to import sufficient quantities of oil and other fuels necessary for continuous power generation. In October 2024, Cuba endured a severe multiday nationwide blackout following the failure of the Antonio Guiteras power plant, one of the country’s principal electricity generation facilities. The collapse of this critical infrastructure resulted in a complete loss of power across the island, affecting all sectors of society. Efforts to restart the national grid proved unsuccessful for several days, highlighting the vulnerability of Cuba’s energy system to single-point failures and the urgent need for infrastructure resilience and diversification in power generation capacity.

Renewable energy has emerged as a central focus of the Cuban government’s energy policy, reflecting a strategic commitment to diversify the nation’s energy matrix and reduce dependence on imported fossil fuels. In particular, the development of wind and solar power has been prioritized as key components of this transition. Recognizing the abundant solar radiation and favorable wind conditions present in many regions of the island, Cuban authorities have sought to harness these natural resources to increase energy security and promote environmental sustainability. This shift aligns with broader national objectives to modernize the energy sector, reduce greenhouse gas emissions, and improve resilience against external economic pressures. A significant milestone in Cuba’s renewable energy agenda occurred in March 2017, when the government enacted a groundbreaking law aimed at the widespread deployment of solar panels to households throughout the country. This legislation marked a decisive step toward democratizing access to renewable energy technologies by encouraging the installation of photovoltaic systems on residential rooftops. The initiative was designed not only to expand electricity generation capacity but also to empower citizens to participate directly in the energy transition. By facilitating the adoption of solar panels at the household level, the government sought to alleviate the strain on the centralized grid and promote energy self-sufficiency among Cuban families. Despite these ambitious efforts, the Cuban Energy Revolution program has faced considerable challenges in its pursuit of sustainable energy development. One of the primary obstacles has been balancing the urgent need to expand renewable energy infrastructure with the broader demands of national development. Cuba’s economy, constrained by decades of economic sanctions and limited access to international financing, has struggled to mobilize sufficient resources for large-scale renewable projects. Additionally, the island’s geographic location in the hurricane belt has exposed its energy infrastructure to frequent and severe storm damage, complicating efforts to establish reliable and resilient renewable energy systems. These factors have necessitated innovative policy measures and international cooperation to overcome structural limitations and advance the country’s renewable energy goals. In response to these challenges and to further stimulate private sector participation, Cuba enacted Decree-Law 345 in 2019. This legal framework authorized Cuban citizens to purchase photovoltaic solar panels for their own use, a significant departure from previous restrictions that limited private ownership of renewable energy equipment. Moreover, the decree established mechanisms allowing individuals to sell any surplus electricity generated by their solar installations back to the state-owned utility company, Unión Eléctrica. This policy created a nascent market for distributed generation and incentivized the expansion of small-scale solar power systems. By enabling households and small businesses to become both consumers and producers of electricity, the government aimed to accelerate the integration of renewable energy into the national grid and foster a more participatory energy economy. By 2022, solar power had become an increasingly visible component of Cuba’s electricity generation portfolio, contributing approximately 1.5% of the country’s total electricity output. While this share remains modest compared to fossil fuel-based sources, it represents a notable increase from previous years and reflects the cumulative impact of government policies and investments in renewable energy infrastructure. The growth of solar power has been supported by ongoing efforts to improve the efficiency and affordability of photovoltaic technologies, as well as by international partnerships providing technical assistance and funding. Continued expansion of solar capacity is expected to play a crucial role in Cuba’s long-term energy strategy, particularly as the government seeks to meet rising electricity demand while reducing environmental impacts and enhancing energy independence.

As of August 2012, Cuba’s efforts to develop its offshore petroleum resources in the Gulf of Mexico had encountered significant challenges. Despite targeting promising geological formations believed to hold substantial hydrocarbon deposits, exploration activities had yet to yield commercially viable results. Two notable exploration attempts had been conducted, both of which ended in failure, underscoring the technical and geological difficulties associated with offshore drilling in the region. Nevertheless, the Cuban government and its partners remained committed to continuing exploration efforts, planning additional drilling campaigns aimed at unlocking the potential of these offshore reserves. These ongoing initiatives reflected Cuba’s strategic interest in reducing its dependence on imported oil and enhancing domestic energy production through the development of indigenous hydrocarbon resources. During the years 2007 and 2008, Cuba’s oil production remained relatively stable, with an estimated output of 62,100 barrels per day (bbl/d). This level of production was modest in comparison to the country’s overall energy needs, highlighting the limitations of Cuba’s domestic oil industry at the time. The production primarily originated from onshore fields and some shallow offshore wells, which had been developed over previous decades but had yet to achieve significant expansion or modernization. Despite these constraints, maintaining a steady production rate was critical for Cuba’s energy security, as it provided a baseline of locally sourced crude oil that could partially offset imports. In contrast to its production figures, Cuba’s oil consumption during 2007 and 2008 was substantially higher, estimated at approximately 176,000 barrels per day. This consumption level reflected the nation’s reliance on petroleum products for electricity generation, transportation, industrial activities, and other sectors of the economy. The disparity between domestic production and consumption underscored Cuba’s dependence on foreign oil supplies to meet its energy demands. The gap necessitated substantial imports, which were essential to sustain economic activities and maintain social services reliant on energy availability. Corresponding to the consumption shortfall, Cuba’s oil imports in 2007 and 2008 amounted to approximately 104,800 barrels per day. These imports were crucial in bridging the gap between domestic production and consumption, accounting for nearly 60% of the country’s oil requirements during this period. The majority of these imports were sourced from Venezuela, Cuba’s primary oil supplier, under preferential agreements that facilitated the transfer of crude oil and refined products. This arrangement was part of a broader strategic partnership between the two countries, which included energy cooperation as a central pillar. The Venezuelan oil imports not only ensured a steady supply of petroleum but also played a significant role in Cuba’s economic and geopolitical relations within the region. Cuba’s proven oil reserves were estimated at 197.3 million barrels, a figure that reflected the cumulative discoveries and assessments of the country’s hydrocarbon potential. These reserves, while modest compared to major oil-producing nations, represented a valuable national asset that could contribute to energy self-sufficiency if effectively developed. The reserves were primarily located in onshore fields and shallow offshore areas, with ongoing exploration efforts aimed at expanding these known quantities. The size and accessibility of these reserves influenced Cuba’s energy strategy, which balanced the pursuit of domestic production with the necessity of maintaining import relationships to satisfy immediate consumption needs. Venezuela’s role as Cuba’s primary source of oil was a defining feature of the island’s energy landscape during the early 21st century. The bilateral relationship between the two nations was characterized by agreements under which Venezuela supplied Cuba with crude oil and petroleum products on favorable terms, often in exchange for Cuban medical and technical personnel. This energy alliance was formalized through mechanisms such as the Petrocaribe agreement, which provided Cuba with access to Venezuelan oil at concessional prices and extended credit arrangements. The stability and reliability of Venezuelan oil imports were vital for Cuba’s energy security, enabling the country to sustain its economic activities and social programs despite limited domestic production capacity. In the domain of natural gas, Cuba’s production and consumption patterns in 2017 reflected a modest but significant component of the national energy mix. That year, the country produced and consumed an estimated 1,189 million cubic meters (m³) of natural gas, indicating that domestic production was sufficient to meet internal demand without reliance on imports. The natural gas was primarily utilized for electricity generation and industrial processes, contributing to the diversification of Cuba’s energy sources beyond oil. The alignment of production and consumption volumes suggested a balanced natural gas sector that operated independently of international trade in this resource. Cuba’s proved natural gas reserves were estimated at 70.79 billion cubic meters (bcm), a substantial quantity that underscored the potential for expanding the role of natural gas in the national energy portfolio. These reserves were identified through geological surveys and exploration activities, with prospects for further development in both onshore and offshore basins. The presence of these reserves offered opportunities for enhancing energy security and reducing the environmental impact of energy consumption by potentially substituting natural gas for heavier fossil fuels. Notably, in 2017, Cuba neither exported nor imported any natural gas, reflecting a self-contained natural gas market. The absence of natural gas trade was consistent with the country’s production capacity being sufficient to satisfy domestic demand, as well as the lack of infrastructure for natural gas export or import, such as pipelines or liquefied natural gas terminals. This autarkic position in natural gas underscored the strategic importance of developing indigenous resources and maintaining a balanced energy supply without external dependencies in this sector.

Cuba’s agricultural sector has historically encompassed a diverse range of crops and livestock, reflecting the country’s varied agrarian economy. Among the principal crops cultivated were sugarcane, tobacco, citrus fruits, coffee, rice, potatoes, and beans, each playing a significant role in both domestic consumption and export revenues. Sugarcane remained one of the most important crops, deeply intertwined with Cuba’s economic history and international trade, while tobacco cultivation supported the island’s renowned cigar industry. Citrus fruits and coffee contributed to both local dietary needs and export markets, whereas staples such as rice, potatoes, and beans formed essential components of the Cuban diet. Livestock farming, including cattle, pigs, and poultry, supplemented crop production by providing meat, dairy products, and other animal-derived goods, thereby contributing to the overall food supply and rural livelihoods. Despite this agricultural diversity, Cuba faced persistent challenges in achieving self-sufficiency in food production. By 2015, the country remained heavily dependent on food imports to meet the nutritional needs of its population. Estimates indicated that approximately 70 to 80 percent of Cuba’s total food supply was imported from abroad, underscoring the limitations of domestic agricultural output. This reliance on external sources for food was influenced by several factors, including limited arable land, climatic vulnerabilities such as hurricanes and droughts, and systemic inefficiencies within the agricultural sector. The dependence on imports exposed Cuba to vulnerabilities in global food markets and complicated efforts to ensure consistent food security. The state-controlled rationing system, which distributed subsidized food to the Cuban population, was particularly reliant on imported goods. Between 80 and 84 percent of the food allocated through this ration system originated from foreign suppliers, highlighting the extent to which domestic production was insufficient to fulfill even the basic dietary needs of the population under government distribution. This heavy importation of rationed food items reflected structural challenges in the agricultural sector, including low productivity, inadequate infrastructure, and bureaucratic obstacles that hindered effective resource allocation and modernization efforts. The ration system itself remained a cornerstone of Cuba’s social policy, aiming to guarantee minimum food access to all citizens despite the broader economic constraints. The inefficiencies and bureaucratic impediments within the agricultural sector became a subject of public criticism by Cuban leadership. Raúl Castro, who served as the President of Cuba during this period, openly denounced the excessive bureaucracy that stifled agricultural productivity and reform initiatives. He ridiculed the convoluted administrative processes and institutional inertia that prevented the sector from achieving its full potential. Castro’s critique highlighted the need for structural reforms to streamline decision-making, reduce red tape, and incentivize production improvements. His public statements underscored a recognition at the highest levels of government that overcoming these systemic barriers was essential for enhancing food security, reducing import dependence, and revitalizing the agricultural economy. These criticisms also reflected broader efforts within the Cuban government to introduce economic reforms aimed at increasing efficiency and productivity across various sectors, including agriculture.

In 1996, industrial production in Cuba represented a substantial segment of the nation’s economy, accounting for nearly 37 percent of the country’s Gross Domestic Product (GDP). This contribution amounted to approximately US$6.9 billion, underscoring the pivotal role that industrial activities played in the Cuban economic landscape during that period. The industrial sector encompassed a diverse array of manufacturing and processing activities, ranging from sugar refining to pharmaceutical production, reflecting the country’s efforts to diversify beyond its traditional agricultural base. The significance of industry was further highlighted by its employment figures; in the same year, roughly 24 percent of the Cuban population was engaged in industrial work. This translated to about 2,671,000 individuals, illustrating the sector’s importance not only in economic terms but also as a major source of livelihood for a considerable portion of the population. The sugar industry, historically central to Cuba’s economy, experienced a notable resurgence in the late 2000s, particularly following a significant increase in sugar prices in 2009. This price surge acted as a catalyst for renewed investment and development within the sugar processing sector, prompting the Cuban government and associated enterprises to channel resources into modernizing facilities and expanding production capacities. The boost in sugar prices came at a critical time when Cuba was seeking to revitalize its industrial base and improve export revenues. Consequently, the sugar processing industry saw an infusion of capital aimed at enhancing efficiency and output, which not only contributed to economic growth but also helped sustain employment in regions heavily dependent on sugar cultivation and processing. By the early 2000s, Cuba had begun to establish itself as a noteworthy player in the global biotechnology and pharmaceutical industries. By 2003, the country’s biotechnology sector had gained increasing importance, both domestically and internationally, as it developed a reputation for innovation and quality in the production of vaccines and therapeutic products. This sector emerged as one of the most dynamic components of the Cuban economy, benefiting from the government’s strategic emphasis on scientific research and development. The biotechnology industry was supported by a network of research institutions, universities, and production facilities that worked collaboratively to translate scientific discoveries into marketable health products. This integration of research and manufacturing allowed Cuba to maintain a steady flow of exports in biotechnology, contributing to the diversification of its export portfolio. Among the various products exported by Cuba’s biotechnology and pharmaceutical industry, vaccines occupied a prominent position. The country developed and exported vaccines targeting multiple viral and bacterial pathogens, which found markets in numerous countries, especially in the developing world. These vaccines were recognized for their efficacy and affordability, making them attractive alternatives to more expensive options available from multinational pharmaceutical companies. The export of vaccines not only generated foreign exchange earnings but also enhanced Cuba’s international standing in global health initiatives. The success of these vaccines was underpinned by Cuba’s robust public health system and its commitment to preventive medicine, which provided an extensive domestic testing ground for new immunization products before they were introduced to foreign markets. One of the most notable pharmaceutical products to emerge from Cuba’s biotechnology sector was Heberprot-P, a drug developed specifically for the treatment of diabetic foot ulcers. This condition, a common and serious complication of diabetes, often leads to infections and amputations if left untreated. Heberprot-P represented a significant advancement in the management of diabetic foot ulcers by promoting wound healing and reducing the need for amputations. The drug achieved considerable success in numerous developing countries, where access to advanced wound care was limited and diabetes prevalence was rising. Its introduction not only improved patient outcomes but also demonstrated Cuba’s capacity to develop innovative medical treatments that addressed global health challenges. The widespread adoption of Heberprot-P in diverse healthcare settings underscored the practical impact of Cuba’s pharmaceutical research and its relevance beyond national borders. In addition to its achievements in wound care, Cuba conducted pioneering research in the development of drugs for cancer treatment, positioning itself as a notable player in this highly specialized field. Cuban scientists and institutions focused on creating novel therapeutic agents that targeted various forms of cancer, leveraging advances in molecular biology and immunology. This research was characterized by a commitment to developing affordable and effective treatments that could be accessible to patients in both Cuba and other countries with limited healthcare resources. The country’s efforts in oncology drug development were supported by a comprehensive scientific infrastructure and a collaborative approach that integrated clinical research with pharmaceutical production. Through these initiatives, Cuba contributed to the global body of knowledge on cancer therapeutics and demonstrated the potential of state-led research programs in generating innovative medical solutions. The achievements of Cuban scientists in biotechnology and related fields were recognized internationally, with individuals such as V. Verez-Bencomo receiving prestigious awards for their contributions. Verez-Bencomo’s work, particularly in vaccine development and sugar cane research, exemplified the intersection of scientific innovation and practical application that characterized Cuba’s industrial and biotechnological advancements. His recognition by global scientific communities highlighted the quality and impact of Cuban research, which often operated under challenging economic conditions due to the country’s geopolitical situation. Awards and honors bestowed upon Cuban researchers served not only as personal accolades but also as validation of the country’s broader scientific and industrial capabilities. These acknowledgments helped to enhance Cuba’s reputation as a center of excellence in biotechnology and agricultural research, fostering international collaborations and opening new avenues for technological exchange.

Cuba’s biotechnology sector emerged largely as a strategic response to the severe restrictions imposed by the United States embargo, which curtailed technology transfer, international financing, and trade opportunities with many countries. This embargo, which began in the early 1960s, significantly limited Cuba’s access to advanced scientific equipment, pharmaceuticals, and investment capital from global markets, compelling the nation to seek self-reliance in critical areas of scientific and technological development. The embargo’s constraints effectively isolated Cuba from the dominant global biotechnology networks, prompting the Cuban government to prioritize the establishment of a domestic biotechnological industry that could meet the country’s healthcare and agricultural needs independently. As a result, biotechnology became a focal point of national policy, aimed at circumventing the technological blockade and fostering innovation within the confines of limited external resources. The biotechnology sector in Cuba is characterized by its complete state ownership, reflecting the Cuban government’s centralized approach to economic planning and scientific research. This ownership structure ensures that all biotechnological enterprises operate under the direct control and coordination of government agencies, primarily the Ministry of Science, Technology and Environment (CITMA) and the Ministry of Public Health. By maintaining state ownership, the government has been able to align the sector’s objectives closely with national priorities, such as improving public health outcomes, developing vaccines and therapeutics tailored to the Cuban population, and supporting sustainable agricultural practices. This centralized model also facilitates the allocation of resources, coordination of research efforts, and integration of production and distribution systems within the biotechnology industry. Unlike many other countries where biotechnology companies are predominantly private or public-private partnerships, Cuba’s state-owned framework underscores the role of biotechnology as a public good rather than a purely commercial enterprise. The impetus behind the development of biotechnology in Cuba was fundamentally rooted in the necessity to overcome the economic and technological limitations imposed by external sanctions and embargoes. With limited access to foreign investment, proprietary technologies, and international scientific collaboration, Cuban scientists and policymakers were compelled to innovate within a constrained environment. This led to the creation of a robust domestic research infrastructure, including the establishment of specialized institutions such as the Center for Genetic Engineering and Biotechnology (CIGB) and the Finlay Institute, which became central to the country’s efforts in vaccine development and biopharmaceutical production. The Cuban government directed substantial resources toward training scientists, developing indigenous technologies, and creating a vertically integrated biotechnology system capable of producing a wide range of pharmaceuticals, vaccines, diagnostic tools, and agricultural bioproducts. This self-sufficient approach not only mitigated the impact of the embargo but also positioned Cuba as a leader in biotechnology within the developing world, with a focus on addressing public health challenges such as infectious diseases, cancer, and diabetes. Over time, the Cuban biotechnology sector expanded its capabilities and product portfolio, achieving significant milestones despite persistent external pressures. The sector’s achievements include the development of innovative vaccines such as the hepatitis B vaccine, which was one of the first to be produced using recombinant DNA technology, and the meningococcal B vaccine, which has been widely used both domestically and internationally. These successes demonstrated the capacity of Cuba’s state-run biotechnology industry to deliver high-quality, cost-effective medical solutions that meet both national and global health needs. Furthermore, the sector has contributed to the Cuban economy by generating export revenues through the sale of biopharmaceutical products and technical services to countries in Latin America, Asia, and Africa. This export activity has provided a valuable source of foreign exchange, helping to sustain the sector’s growth and support the broader Cuban economy amid ongoing economic challenges. In addition to healthcare applications, Cuban biotechnology has also been directed toward agricultural development, with the production of biofertilizers, biopesticides, and genetically improved crops aimed at enhancing food security and reducing dependence on imported agrochemicals. These innovations have been particularly important given the limitations on access to conventional agricultural inputs caused by the embargo and other economic constraints. The integration of biotechnology into Cuba’s agricultural sector reflects a comprehensive approach to leveraging scientific advancements for national development, encompassing both health and food production. Through this multifaceted strategy, Cuba has demonstrated the potential for a state-led biotechnology sector to contribute significantly to national resilience, scientific progress, and economic sustainability in the face of external adversities.

In the mid-1990s, tourism in Cuba overtook sugar as the principal source of foreign exchange, signaling a profound transformation in the nation’s economic landscape. For decades, sugar production had been the cornerstone of Cuba’s economy, but the collapse of the Soviet Union and the subsequent loss of preferential trade agreements forced the country to diversify its sources of foreign currency. Tourism emerged as a vital sector, offering a more sustainable and lucrative avenue for earning hard currency. This shift was not only economic but also strategic, as the Cuban government recognized the potential of its rich cultural heritage, historic architecture, and natural beauty to attract international visitors. In response to this new economic reality, Havana, the capital city, dedicated substantial resources to the development of tourist infrastructure and the restoration of its historic sites. The government undertook extensive renovations of colonial-era buildings, plazas, and museums, aiming to enhance the city’s appeal to foreign tourists. Hotels were constructed and modernized to meet international standards, and transportation networks were improved to facilitate easier access to key destinations. These efforts were part of a broader state-led initiative to position Cuba as a premier tourist destination in the Caribbean, capitalizing on its unique blend of history, culture, and natural attractions. By 1999, Cuban officials estimated that approximately 1.6 million tourists had visited the island, generating around $1.9 billion in gross revenue from tourism-related activities. This marked a significant increase from previous years and underscored the growing importance of the sector to the national economy. The influx of foreign visitors contributed not only to government coffers but also to the creation of jobs in hospitality, transportation, and entertainment. Tourism revenues became a critical source of funding for public services and infrastructure projects, helping to stabilize the economy during a period of hardship. The upward trend in tourism continued into the new millennium. In 2000, the number of foreign visitors to Cuba rose to 1,773,986, with tourism revenue reaching approximately US$1.7 billion. Although the revenue figure represented a slight decrease from the previous year, the overall growth in visitor numbers indicated sustained international interest in Cuba as a travel destination. This period saw the diversification of tourist markets, with increasing arrivals from Canada, Europe, and Latin America, alongside traditional visitors from the United States and other regions. The government continued to promote Cuba’s cultural festivals, beaches, and ecotourism opportunities to attract a broader demographic of travelers. By 2012, the annual number of visitors to Cuba had grown to about 3 million, contributing nearly £2 billion in revenue each year. This rapid expansion reflected Cuba’s successful efforts to capitalize on its tourism potential and the growing global demand for Caribbean travel experiences. The tourism sector became one of the largest contributors to the country’s GDP, supporting a wide range of ancillary industries such as agriculture, construction, and retail. The government maintained its focus on sustainable tourism development, balancing economic growth with the preservation of Cuba’s natural and cultural resources. However, the expansion of tourism also brought significant social and economic consequences, fundamentally altering Cuban society. One of the most notable effects was the emergence of a two-tier economy, often described as a form of “tourist apartheid.” This system created a stark division between those who had access to the foreign currency economy associated with tourism and those who remained confined to the traditional peso-based economy. The influx of dollars during the 1990s intensified economic disparities, as the availability of foreign currency became a critical determinant of material well-being. Imported goods, including some locally produced items such as rum and coffee, became predominantly available in dollar-only stores, known as “dollar stores” or “hard currency shops.” These establishments catered primarily to tourists and Cubans who earned incomes in foreign currency, effectively making these goods scarce or entirely inaccessible to those relying solely on the peso economy. The dual pricing system meant that everyday Cubans, who earned wages in pesos and did not have access to dollars, faced significant limitations in obtaining a wide range of consumer products. This scarcity contributed to a sense of economic exclusion and frustration among the local population. Cubans employed in sectors outside the tourist industry, earning only peso salaries, found themselves at a disadvantage due to their limited purchasing power in the dual currency system. Their inability to access dollar-based goods and services restricted their consumption choices and quality of life. In contrast, those Cubans who worked in the tourism sector or received remittances from abroad, thereby earning dollars, experienced a markedly higher standard of living. These individuals could afford better housing, food, and consumer goods, leading to a more comfortable lifestyle that was unattainable for the majority of the population. The widening economic disparity created by the tourism boom conflicted with the Cuban government’s long-standing socialist principles, which emphasized equality and the equitable distribution of resources. The emergence of a dual economy and the associated social stratification challenged the ideological foundations of the Cuban state and raised questions about the sustainability of its economic model. While tourism brought much-needed foreign exchange and economic revitalization, it also introduced new complexities and tensions within Cuban society, highlighting the difficulties of balancing economic pragmatism with socialist ideals.

Cuba’s retail sector has historically been characterized by its relatively small scale and limited scope compared to retail markets in other countries. The size and variety of retail establishments have remained modest, reflecting the broader economic structure and policies of the nation. As of September 2012, the retail landscape in Havana, the capital city, featured only a handful of large shopping centers. These centers were few in number and did not represent a widespread retail expansion but instead served as isolated examples of more modern commercial facilities within the city. Despite their limited presence, these shopping centers charged prices that were comparable to those found in the United States, suggesting that retail prices in these venues were relatively high by Cuban standards. This pricing structure indicated a divergence between the availability of goods and their affordability for the average Cuban consumer, given the country’s economic conditions and income levels. The retail environment in Cuba underwent significant transformation following the Cuban Revolution of 1959. Prior to the revolution, commercial districts in cities like Havana were vibrant and diverse, featuring a variety of privately owned shops and businesses. However, in the wake of the revolution, the new government implemented widespread nationalization policies that led to the closure of many of these commercial districts. The revolution’s emphasis on socialist principles and state control resulted in the dismantling of much of the private retail sector, effectively shutting down the pre-existing commercial hubs that had catered to a broader consumer base. This shift aimed to realign the economy towards state-run enterprises and reduce reliance on capitalist retail models, fundamentally altering the retail landscape. In the current retail framework, the majority of outlets consist of smaller-scale establishments that operate within the constraints of the Cuban economic system. These include small dollar stores, which sell goods in exchange for foreign currency, primarily U.S. dollars or convertible pesos, reflecting the dual currency system that has existed in Cuba. These dollar stores often carry imported or higher-quality goods that are not typically available in the regular peso economy. Alongside these are bodegas, which are local grocery stores that serve as primary points of access for everyday food items and household necessities. Bodegas are generally state-operated and distribute goods at subsidized prices, though the range of products available is often limited. Complementing these retail outlets are agro-mercados, or farmers’ markets, which play a crucial role in the distribution of fresh produce and agricultural products directly from farmers to consumers. These markets provide an important source of food for many Cubans, especially given the constraints on the formal retail sector. Street stands also contribute to the retail ecosystem by offering a variety of goods in informal settings, often serving as accessible points for small purchases and contributing to the informal economy. Collectively, these smaller retail formats constitute the backbone of Cuba’s retail sector, reflecting both the economic realities and the government’s regulatory framework that shapes commercial activity throughout the country.

The financial sector of Cuba has historically been characterized by extensive regulation and stringent governmental oversight, reflecting the country’s broader centrally planned economic framework. This regulatory environment has ensured that financial activities remain closely controlled by state authorities, limiting the scope for private sector participation and market-driven financial mechanisms. The Cuban government’s approach to the financial sector has prioritized stability and alignment with national economic policies, often at the expense of fostering a more dynamic and competitive financial marketplace. As a result, financial institutions, including banks and credit organizations, operate under strict guidelines that restrict their autonomy and the range of services they can provide to individuals and businesses. One of the most significant consequences of this tightly regulated financial system is the limited access to credit for entrepreneurial activities. Cuban entrepreneurs and small business owners face considerable challenges when attempting to secure financing necessary for starting or expanding their ventures. The availability of credit is often constrained by bureaucratic procedures and the absence of a robust credit market that can efficiently allocate resources to productive uses. This situation hampers the development of the private sector, which has been identified as a key driver for economic diversification and growth in Cuba’s evolving economic landscape. Without adequate credit facilities, entrepreneurs struggle to invest in capital, technology, and human resources, thereby limiting their potential to contribute to the national economy. The root causes of these credit access issues lie primarily in the shallowness of Cuba’s financial market, which reflects the limited depth and breadth of financial institutions and services available within the country. Unlike more developed financial systems where a variety of banks, credit unions, and non-bank financial intermediaries compete and innovate to meet the diverse needs of borrowers, Cuba’s financial market remains narrow and underdeveloped. The range of financial products is restricted, and the mechanisms for assessing creditworthiness and managing risk are rudimentary. This shallow market structure results in a lack of competition and innovation, which in turn reduces the incentives for financial institutions to expand credit offerings or develop specialized products tailored to entrepreneurial needs. Moreover, the limited presence of private financial institutions and the dominance of state-owned banks contribute to the constrained credit environment. State banks often prioritize lending to state enterprises or projects aligned with government priorities, leaving private entrepreneurs with fewer opportunities to obtain financing. The absence of a well-functioning credit reporting system and collateral markets further exacerbates the problem, as lenders face increased risks when extending credit to small and medium-sized enterprises. These structural deficiencies in the financial market create a cycle of limited credit availability and subdued entrepreneurial activity, which poses a significant barrier to economic modernization and diversification. Efforts to reform the financial sector and deepen the market have been cautious and incremental, reflecting the government’s desire to maintain control while gradually introducing elements of market-oriented reforms. Initiatives aimed at expanding financial services, improving regulatory frameworks, and encouraging the development of non-bank financial institutions have been explored, but progress has been slow and uneven. The persistence of a heavily regulated financial sector, combined with the shallow financial market, continues to restrict the flow of credit to entrepreneurs, thereby limiting their capacity to innovate, grow, and contribute more significantly to Cuba’s economic development.

In 2023, Canada emerged as the largest destination for Cuban exports, accounting for 30.6% of the total export volume. This significant share underscores the longstanding commercial relationship between the two countries, which has persisted despite the complex geopolitical dynamics surrounding Cuba. A substantial portion, estimated between 70 and 80%, of Canada’s exports to Cuba are channeled through Indiana Finance BV, a company owned by the Van ’t Wout family. This family maintains close personal ties with Fidel Castro, a connection that has facilitated the flow of goods and services between Canada and Cuba through this particular corporate entity. The prominence of Indiana Finance BV in managing trade transactions exemplifies a broader pattern observed in colonial Caribbean communities, where trade and investment are often conducted through intermediaries with direct political and economic links to the global economy. These intermediaries frequently operate within networks that blend familial, political, and economic relationships, reflecting the region’s historical and contemporary integration into international trade systems. Cuba’s primary import partner is Venezuela, a relationship that highlights the strong economic and political ties between the two nations, particularly in the context of regional cooperation within Latin America. Venezuela’s role as Cuba’s main supplier of goods and services stems from bilateral agreements that have included energy subsidies and preferential trade arrangements, which have been critical to Cuba’s economy, especially during periods of international isolation. China ranks as Cuba’s second-largest trade partner, commanding a 16.9% share of Cuban exports. The growing economic engagement with China reflects Cuba’s strategic diversification of trade partners and its efforts to strengthen ties with emerging global powers. Chinese investment and trade have expanded in sectors ranging from infrastructure to technology, signaling a deepening of bilateral economic relations. The Cuban government’s pursuit of foreign investment began in earnest during the Special Period, an era of severe economic crisis triggered by the collapse of the Soviet Union in the early 1990s. This period forced Cuba to reevaluate its economic policies and seek new sources of capital and trade to mitigate the loss of Soviet subsidies and trade. As part of this strategic shift, Cuba introduced a framework requiring foreign investors to form joint ventures with the Cuban government, thereby maintaining state control over economic activities while attracting external capital and expertise. An important exception to this rule exists for Venezuelan investors, who, under a bilateral agreement, are permitted to hold 100% ownership of their investments in Cuba. This exception underscores the unique political and economic alliance between Cuba and Venezuela, which has been characterized by mutual support and preferential treatment in economic dealings. By early 1998, Cuban officials reported the establishment of 332 joint ventures with foreign partners. However, many of these arrangements did not conform to the conventional Western model of equity investment. Instead, a significant number were structured as loans, management contracts, supply agreements, or service contracts. This approach reflects Cuba’s distinctive economic model, which prioritizes state oversight and control while cautiously integrating foreign capital. The joint ventures often functioned more as cooperative partnerships with limited foreign ownership stakes, designed to protect national interests and maintain sovereignty over key sectors of the economy. The United States has imposed legislative measures that have constrained foreign investment in Cuba, most notably through the Helms–Burton Act. This law sanctions individuals and entities involved in trafficking in property expropriated from U.S. citizens following the Cuban Revolution. The act’s extraterritorial provisions have deterred many potential investors by threatening legal and financial repercussions, thereby complicating Cuba’s efforts to attract foreign capital. Despite these challenges, Cuba has maintained a tariff regime with an average rate of 10 percent. This tariff level influences the country’s trade policies and economic relations by balancing the protection of domestic industries with the need to engage in international commerce. As of 2014, Cuba’s economy remained largely planned and centrally controlled, characterized by strict state regulation over capital flows and foreign exchange. These extensive controls created an environment that discouraged foreign trade and investment, as the regulatory framework imposed significant barriers to market entry and profit repatriation. Nevertheless, the country witnessed a notable shift in the subsequent years. By 2017, Cuba reported a record foreign investment inflow of 2 billion USD, marking a significant increase from previous years. This surge in investment reflected gradual economic reforms and a cautious opening to foreign capital, signaling a shift toward more engagement with the global economy. The dramatic increase in foreign investment since 2014 can be attributed to a combination of factors, including policy adjustments aimed at attracting capital, efforts to modernize infrastructure, and the diversification of economic partnerships. These developments indicate a measured transition from a strictly state-controlled economy toward a model that accommodates greater foreign participation, albeit within the parameters set by the Cuban government. In September 2019, the European Union’s foreign policy chief, Federica Mogherini, visited Cuba and reaffirmed the EU’s commitment to supporting Cuba’s economic development. This diplomatic engagement highlighted the EU’s role as a significant partner in Cuba’s ongoing economic reforms and its interest in fostering sustainable growth through cooperation and investment. Mogherini’s visit underscored the potential for expanded economic ties between Cuba and European nations, emphasizing collaboration in areas such as trade, investment, and technical assistance. A visual reference to a tobacco plantation in Pinar del Río within this context serves to emphasize Cuba’s agricultural exports, which remain a vital component of the country’s trade portfolio. Tobacco, particularly Cuban cigars, continues to be one of the nation’s most iconic and economically significant export products. The prominence of agricultural exports like tobacco illustrates the enduring importance of traditional sectors in Cuba’s economy, even as the country seeks to diversify and modernize its trade and investment relationships.

From 1994 until 2021, Cuba officially operated a dual currency system consisting of the national peso (CUP) and the convertible peso (CUC). The convertible peso, commonly referred to colloquially as the “dollar,” functioned alongside the national peso but held a distinct role within the Cuban economy. The CUP was primarily used for most domestic transactions, including the purchase of basic goods and services, while the CUC was introduced to facilitate transactions involving foreign currency and was often employed in sectors linked to tourism and international trade. This bifurcated monetary system reflected the complexities of Cuba’s economic structure during this period, where the coexistence of two currencies underscored the division between the domestic economy and the foreign exchange market. In January 2021, the Cuban government initiated a currency unification process aimed at eliminating the dual currency system that had been in place for nearly three decades. This reform provided citizens with a six-month window to exchange their remaining convertible pesos (CUCs) for national pesos (CUPs) at a fixed conversion rate of one CUC to 24 CUPs. The unification was designed to simplify the monetary system and address economic distortions caused by the coexistence of two currencies with different values and functions. By consolidating the currencies, the government sought to improve economic transparency, reduce inefficiencies, and foster a more equitable distribution of resources among the population. The possession and use of the United States dollar in Cuba were legalized in 1994, marking a significant shift in the country’s monetary policy. This legalization allowed for the circulation of US dollars within the Cuban economy, facilitating transactions especially in the tourism sector and among individuals receiving remittances from abroad. By 2004, the US dollar had become widely circulated and used across the country, reflecting its importance as a hard currency in an economy that faced chronic shortages of foreign exchange. The widespread acceptance of the US dollar was a response to the need for a stable and internationally recognized currency that could support Cuba’s growing interactions with the global economy, particularly through tourism and international trade. To effectively manage the inflow of hard currency generated by tourism and remittances—estimated to range between $500 million and $800 million annually—the Cuban government established state-operated retail outlets commonly known as “dollar stores.” These stores specialized in selling luxury food items, household goods, and clothing, which were generally not available for purchase with the national peso. The creation of these stores represented an attempt by the government to capture and regulate foreign currency earnings within the domestic market. By offering goods that were otherwise scarce or unavailable in CUP-denominated stores, the dollar stores became a symbol of the dual economy, catering primarily to those who had access to hard currency, whether through remittances, tourism-related employment, or other means. The dual-currency system entrenched significant disparities in living standards across Cuban society. Individuals with access to US dollars or convertible pesos enjoyed far greater purchasing power and access to a wider range of goods and services than those restricted to the national peso. This economic stratification fostered social divisions, as the ability to obtain foreign currency often correlated with employment in sectors linked to tourism, international business, or remittances from relatives abroad. Consequently, the dual currency system not only reflected but also reinforced inequalities, creating a bifurcated society in which the economic opportunities and quality of life varied considerably depending on one’s access to hard currency. Employment opportunities that offered salaries or tips in US dollars became highly sought after, as these jobs provided a direct link to the more valuable convertible currency and thus a higher standard of living. Common occupations that paid in dollars included doctors, engineers, scientists, restaurant workers, and taxi drivers, many of whom interacted regularly with foreign tourists or worked in joint ventures and foreign enterprises. These dollar-based incomes allowed workers to shop at dollar stores and access goods and services that were otherwise unavailable or prohibitively expensive when paid in national pesos. This dynamic contributed to a labor market segmented by currency, where dollar-denominated wages offered a significant economic advantage. In response to intensified economic sanctions imposed by the United States and the Cuban government’s assessment of its own economic recovery, a major policy shift occurred in October 2004. The Cuban authorities decided to remove the US dollar from circulation within the country. This move was part of a broader strategy to assert greater control over the monetary system and reduce the influence of the US dollar on the Cuban economy. The withdrawal of the US dollar from active circulation was intended to curtail the informal dollar economy and to encourage the use of the newly introduced convertible peso as the primary hard currency within Cuba. The convertible peso (CUC) was introduced as a replacement for the US dollar in domestic circulation, maintaining a pegged exchange rate of one CUC to one US dollar. However, unlike the US dollar, the CUC was not traded internationally and was strictly confined to the Cuban economy. This peg ensured that the CUC retained the purchasing power of the US dollar within Cuba, facilitating transactions in the tourism sector and other areas where hard currency was essential. The introduction of the CUC allowed the Cuban government to exercise greater monetary sovereignty and control over foreign currency flows, while still providing a stable currency for international visitors and domestic enterprises engaged in foreign trade. To further regulate currency exchange and discourage the use of US dollars, the Cuban government imposed a 10% surcharge on cash conversions from US dollars to convertible pesos. This surcharge was not applied to conversions from other foreign currencies, such as euros, British pounds sterling, or Canadian dollars. The policy effectively incentivized tourists and foreign visitors to bring in alternative currencies rather than US dollars, thereby diversifying the sources of hard currency entering the Cuban economy. This measure also reflected the government’s desire to reduce reliance on the US dollar amid ongoing political tensions and economic sanctions imposed by the United States. In line with these currency policies, an increasing number of tourist zones in Cuba began accepting euros as a form of payment. The acceptance of euros alongside the convertible peso and other foreign currencies represented a strategic adaptation to the shifting international financial environment. By accommodating euros, the Cuban economy sought to attract European tourists and investors, providing greater flexibility in currency transactions and reducing dependence on the US dollar. This diversification of accepted currencies in tourist areas underscored Cuba’s efforts to navigate complex geopolitical challenges while maintaining vital sources of foreign exchange necessary for economic stability and growth.

Owners of small private restaurants in Cuba, commonly referred to as paladares, initially operated under stringent regulatory constraints. These establishments were limited to seating no more than 12 patrons, a restriction designed to maintain the predominance of state-run enterprises and control the scale of private entrepreneurship. Furthermore, paladares were only permitted to employ family members, effectively barring the hiring of external staff and limiting the potential for business expansion. Operators faced fixed monthly fees that were payable regardless of their actual income, imposing a financial burden that did not account for fluctuations in business performance. The regulatory environment was further characterized by frequent inspections, which often resulted in stiff fines for violations of self-employment regulations. These measures reflected the Cuban government’s cautious approach to private enterprise, aiming to balance limited economic liberalization with the preservation of socialist principles. By 2023, the distribution of employment between the public and private sectors in Cuba had undergone a significant transformation compared to previous decades. Approximately 65% of the Cuban workforce was employed in the public sector, while the private sector accounted for 35%, indicating a notable shift toward private economic activity. This represented a considerable change from the year 2000, when public sector employment stood at 76% and private sector employment at 23%. The trend was even more pronounced when compared to 1981, during which 91% of workers were employed by the state and only 8% were engaged in private sector jobs. This gradual rebalancing of employment sectors reflected the Cuban government’s incremental reforms aimed at diversifying the economy and fostering private initiative, albeit within a framework that maintained significant state control. The expansion of private agricultural activity in Cuba was marked by a key development in 2012, when over 150,000 farmers signed agreements to lease land from the government specifically for the cultivation of bonus crops. These agreements allowed farmers to operate on leased land with greater autonomy, incentivizing increased agricultural production beyond state quotas. The leasing system represented a departure from previous policies under which land was predominantly state-owned and centrally managed, signaling a shift toward market-oriented practices within the agricultural sector. This move aimed to boost food production, improve efficiency, and reduce reliance on imports by empowering individual farmers to respond more directly to market demands. Before the introduction of land leasing agreements, Cuban homeowners were restricted to swapping properties rather than engaging in outright buying and selling. This limitation was part of a broader regulatory framework that tightly controlled property transactions to prevent the emergence of private land markets. However, the transition to permitting the buying and selling of land led to a significant increase in land prices, as market forces began to influence property values. The ability to trade land introduced elements of private ownership and investment into the Cuban economy, contributing to the gradual evolution of property rights and economic liberalization. This change also reflected the government’s recognition of the need to stimulate economic activity through more flexible land tenure arrangements. Urban agriculture in Cuban cities has developed as a vital component of local food systems, involving small-scale farms cultivated on limited parcels of land within urban areas. Among these, organic gardens known as organopónicos have gained popularity among city residents, who grow vegetables and other produce using sustainable methods. These gardens serve both subsistence and commercial purposes, with many urban farmers selling their harvests locally. This localized production allows them to avoid certain taxes and benefits from government support provided by the Ministry of Agriculture (MINAGRI). Support mechanisms include the establishment of seed houses that supply planting materials and advisory services that offer technical guidance to urban farmers. The growth of organopónicos reflects Cuba’s innovative response to food security challenges, particularly in urban environments where access to fresh produce can be limited. In February 2021, the Cuban government announced plans to further liberalize the economy by permitting private sector operation in most economic sectors. This reform significantly reduced the number of activities reserved exclusively for public control, leaving only 124 sectors under state management. These sectors included critical areas such as national security, health, and educational services, which remained firmly within the public domain. The announcement marked a decisive step toward expanding private enterprise and reducing the state’s direct involvement in economic activities, aligning with broader efforts to modernize the Cuban economy and encourage entrepreneurship. By opening most sectors to private participation, the government sought to stimulate economic growth, increase efficiency, and create employment opportunities. Following this policy shift, in August 2021, Cuba began allowing citizens to establish small and medium-sized private companies, a move that represented a significant departure from previous restrictions on private enterprise. These newly permitted companies were allowed to employ up to 100 workers, enabling the creation of larger private businesses than had previously been possible under the self-employment framework, which had limited employment to family members or a small number of employees. This development opened new avenues for economic activity, fostering the growth of a more diverse and dynamic private sector capable of contributing more substantially to the national economy. By 2023, the effects of these reforms were evident in the registration of approximately 8,000 private companies across Cuba. This burgeoning private sector reflected the increasing willingness of Cuban citizens to engage in entrepreneurial activities and the government’s gradual acceptance of private enterprise as a complement to the public economy. The registration of such a significant number of private companies underscored the changing economic landscape and the ongoing transition toward a mixed economy model, where private businesses play an increasingly important role. Despite these reforms, Cuba’s economic freedom remained limited according to international assessments. In 2021, the Heritage Foundation assigned Cuba an “economic freedom” score of 28.1, ranking it 176th globally among the least free economies. This ranking was based on criteria including trade freedom, fiscal freedom, monetary freedom, and business freedom, all of which reflected the persistent challenges faced by private enterprises in Cuba. The low score highlighted the constraints imposed by government regulations, limited market mechanisms, and the enduring dominance of the state in many economic spheres. Within the regional context, Cuba ranked 31st out of 32 countries in South and Central America in the Heritage Foundation’s economic freedom assessment. Venezuela, identified as a “client state” of Cuba, was also ranked among the least free economies in the region. However, it should be noted that the source of this regional ranking requires further verification. The comparison underscored the broader difficulties faced by countries in the region with restrictive economic policies and limited market freedoms, situating Cuba within a group of nations where state control continues to impede the development of fully liberalized economies.

Until June 2019, typical wages in Cuba were notably low by international standards, reflecting the country’s unique economic model and ongoing challenges. Factory workers earned approximately 400 non-convertible Cuban pesos (CUP) per month, while doctors received somewhat higher wages of around 700 CUP monthly. These amounts translated roughly to between 17 and 30 US dollars per month, underscoring the limited purchasing power of Cuban salaries in the context of global currency values. Despite such modest income levels, Cuba’s Human Development Index (HDI) ranked significantly higher than most Latin American countries, illustrating the country’s relatively advanced social development indicators. This disparity between income and social outcomes highlighted Cuba’s investment in health, education, and social services, which contributed to better overall human development despite economic constraints. The economic difficulties faced by Cuba became particularly acute following the collapse of the Soviet Union in 1991. The loss of Soviet subsidies, which had previously underpinned much of the Cuban economy, triggered a severe economic crisis known as the “Special Period.” During this time, widespread malnutrition emerged as a critical public health issue, accompanied by outbreaks of diseases that had previously been under control. These hardships reflected the abrupt cessation of external support and exposed the vulnerabilities of Cuba’s centrally planned economy. The government’s ability to maintain social programs was strained, and the population endured significant deprivation as the country struggled to adjust to a new economic reality without Soviet aid. Despite these challenges, the Cuban government has consistently reported one of the lowest poverty levels in the developing world. According to official statistics, Cuba ranks sixth globally out of 108 countries in terms of low poverty rates, fourth within Latin America, and 48th among all nations worldwide. These figures suggest a relatively equitable distribution of resources and social protection mechanisms that mitigate extreme poverty. However, contrasting data from independent sources paint a more complex picture. A 2022 report by the Cuban Human Rights Observatory (OCDH) indicated that approximately 72 percent of Cubans live below the poverty line, revealing significant economic hardship for a majority of the population. This discrepancy between official and independent assessments highlights ongoing debates about the true extent of poverty and economic well-being in Cuba. Within the population living below the poverty line, the report noted that 21 percent frequently go without breakfast, lunch, or dinner due to insufficient financial means. This statistic underscores the severity of food insecurity faced by many Cubans, despite the government’s efforts to provide basic sustenance through social programs. The persistence of hunger and malnutrition among a substantial portion of the population reflects broader economic difficulties, including limited access to goods, low wages, and the impact of international sanctions and trade restrictions. Pensions in Cuba are among the smallest in the Americas, averaging only $9.50 per month. This low level of retirement income poses challenges for elderly citizens who rely on state support after decades of work. In 2009, then-President Raúl Castro increased minimum pensions by two dollars, emphasizing the necessity of compensating those who had dedicated much of their lives to labor and the importance of upholding socialism. This modest increase was framed as both a social justice measure and a reaffirmation of the government’s commitment to its ideological principles, although the absolute amounts remained minimal in terms of purchasing power. The Cuban government operates a system of food distribution known as the Libreta de Abastecimiento (“Supplies booklet”), which allocates rations and determines the frequency at which individuals receive basic foodstuffs and other necessities. Despite rumors and speculation about the system’s abolition, it has persisted as a foundational element of Cuba’s social safety net. The Libreta functions as a rationing mechanism designed to ensure equitable access to essential goods amid chronic shortages and economic constraints. Through this system, the government attempts to manage scarcity and prevent market distortions, although it also reflects the limitations of the Cuban economy in providing sufficient food through conventional market channels. In June 2019, the Cuban government announced a significant wage increase in the public sector, raising salaries by roughly 300 percent. This adjustment particularly benefited teachers and health personnel, groups that had historically received relatively low compensation despite their critical roles in Cuban society. The wage hike was part of broader economic reforms aimed at improving living standards and addressing disparities within the public workforce. However, the government also acknowledged that these changes were unpopular among some segments of the population, reflecting concerns about inflation, purchasing power, and the broader economic environment. In October 2019, Cuba introduced stores where citizens could purchase household supplies and similar goods using electronic cards loaded with foreign currencies such as the US dollar and the euro. These cards were primarily funded by remittances sent from Cuban emigrants abroad, creating a new channel for accessing goods that were otherwise scarce or unavailable in the domestic market. The establishment of these stores represented a significant shift in the Cuban economy, as it facilitated the use of foreign currency in everyday transactions and linked the domestic market more closely to global economic flows. The government justified the creation of these stores and the wage increases as necessary measures to prevent capital flight to countries like Panama, where Cubans frequently traveled to purchase imported items for resale. By providing a domestic outlet for such goods, the government aimed to retain economic activity within Cuba and reduce the outflow of currency and resources. On 1 January 2021, Cuba launched the “Tarea Ordenamiento” (Ordering Task), a comprehensive economic reform designed to eliminate the use of the Cuban convertible peso (CUC) and establish the Cuban peso (CUP) as the sole official currency. This monetary unification sought to improve economic efficiency by simplifying the currency system, reducing distortions caused by dual currency circulation, and enhancing transparency in financial transactions. The reform was publicly announced on national television by President Miguel Díaz Canel and General Raúl Castro, who was then the first secretary of the Cuban Communist Party. Their joint presentation underscored the political significance of the reform and the government’s commitment to addressing longstanding economic challenges. Following the currency reform, in February 2021, the government imposed restrictions on 124 private sector activities, particularly in sensitive areas such as national security, health, and education. These measures reflected the state’s cautious approach to private enterprise and its desire to maintain control over sectors deemed strategically important or vulnerable to external influence. The restrictions limited the scope of private economic activity, reinforcing the predominance of the state sector while allowing some degree of private participation under regulated conditions. Simultaneously, wages and pensions were increased substantially across all sectors, with raises ranging between four and nine times previous levels. For example, a university instructor’s salary rose from 1,500 CUP to 5,500 CUP, representing a significant improvement in income for professionals in education. These increases aimed to address the erosion of purchasing power caused by inflation and the currency unification process, seeking to improve living standards and reduce economic hardship. However, the rapid rise in nominal wages also posed risks of inflationary pressures and required careful management by economic authorities. Despite these adjustments, the Cuban central bank maintained the official exchange rate of the US dollar at 24 CUP. Nevertheless, the bank was unable to sell dollars to the public due to a shortage of foreign currency reserves, a situation exacerbated by the economic disruptions caused by the COVID-19 pandemic. The pandemic severely impacted Cuba’s tourism sector and remittance flows, which are critical sources of foreign currency for the country. The resulting scarcity of dollars constrained the government’s ability to stabilize the currency market and meet public demand for foreign exchange, contributing to ongoing economic challenges.

Bodegas in Cuba serve as fundamental retail outlets that provide local communities with essential everyday products at subsidized prices. These small neighborhood shops typically stock staple food items such as rice, sugar, salt, beans, and cooking oil, along with basic household necessities like matches and rum. Established as part of the government’s rationing system, bodegas ensure that even the most economically disadvantaged populations have access to vital goods, often at prices significantly lower than those found in private markets. Their widespread presence across urban and rural areas underscores their role in maintaining food security and supporting the daily consumption needs of Cuban families. Complementing these essential retail points, El Coppelia stands out as a government-owned facility that has become a cultural icon in Cuba. Famous for its affordable ice cream, fresh juices, and various sweets, El Coppelia operates not only as a purveyor of refreshments but also as a popular social and recreational venue. Since its establishment in Havana in 1966, it has attracted a diverse clientele ranging from local residents to tourists, serving as a communal gathering place where people from different backgrounds converge. The facility’s reputation for offering a wide variety of flavors at low prices has made it a symbol of accessible leisure and social interaction within the Cuban public sphere. In contrast to state-run establishments, paladares represent a distinct segment of Cuba’s hospitality industry characterized by small, privately owned restaurants that operate independently of government control. Emerging more prominently in the 1990s following economic reforms that allowed limited private enterprise, paladares have grown to embody a form of private entrepreneurship within the otherwise state-dominated economy. These establishments often operate out of private homes or small commercial spaces, offering diverse culinary options that range from traditional Cuban dishes to international cuisine. The rise of paladares has not only provided alternative dining experiences for both locals and visitors but has also contributed to the diversification of the Cuban economy by fostering small business development and innovation in the food service sector. Healthcare accessibility in Cuba is further supported by la farmacia, the government-operated pharmacies that provide medicines at remarkably low prices. These pharmacies are recognized for offering the lowest pharmaceutical costs in the world, a critical factor in ensuring that the Cuban population has affordable access to necessary medications. The extensive network of farmacias throughout the country forms an integral part of the national healthcare system, facilitating the distribution of both prescription and over-the-counter drugs. This approach aligns with Cuba’s broader public health policies aimed at universal healthcare coverage, emphasizing prevention and treatment accessibility regardless of socioeconomic status. Telecommunications in Cuba are centrally managed by ETECSA (Empresa de Telecomunicaciones de Cuba S.A.), the national telephone service provider responsible for overseeing all aspects of the country’s phone and internet services. Established in 1994, ETECSA functions as a state monopoly, regulating the infrastructure and service provision for both fixed-line and mobile telephony as well as internet connectivity. Despite facing challenges related to limited resources and international sanctions, ETECSA has progressively expanded coverage and introduced new technologies, including mobile data services and public Wi-Fi hotspots. The company’s role is pivotal in connecting Cuban citizens domestically and internationally, facilitating communication and access to information in a controlled and regulated environment. La feria, translating to “the fair,” is a government-owned weekly market event held every Sunday that serves as a vibrant marketplace for a variety of goods. These markets provide an opportunity for vendors to sell fresh produce, household items, clothing, and artisanal products directly to consumers. La feria functions as an important economic and social gathering, allowing for the circulation of goods that may not be readily available in regular state stores or bodegas. By organizing these weekly fairs, the government supports regulated commerce and provides an additional venue for both producers and consumers to engage in trade within a structured framework. Within Cuba’s beverage industry, Cervecería Bucanero plays a significant role as a manufacturer of both alcoholic and non-alcoholic drinks. Founded in 1960 and headquartered in Santiago de Cuba, the company produces a range of beverages that include popular beers such as Bucanero and Cristal, as well as soft drinks and bottled water. Cervecería Bucanero’s products are widely distributed across the island and have become staples in Cuban social and cultural life. The company’s operations contribute to the national economy by generating employment, supporting local agriculture through ingredient sourcing, and promoting Cuban brands domestically and abroad. Ciego Montero serves as the primary distributor of soft drinks and beverages throughout Cuba, functioning as a central hub within the country’s distribution network for non-alcoholic drinks. Operating under the umbrella of the Cuban Ministry of Food Industry, Ciego Montero manages the production and dissemination of a variety of beverages, including mineral waters, flavored soft drinks, and juices. Its extensive distribution channels ensure that these products reach both urban centers and remote areas, facilitating widespread consumer access. The company’s strategic role in beverage distribution complements the manufacturing efforts of producers like Cervecería Bucanero, collectively sustaining the availability and diversity of drink options for the Cuban population.

Cuba and Venezuela developed a strategic partnership centered on an exchange of resources that significantly shaped their bilateral relations and economic structures. Under this arrangement, Venezuela supplied Cuba with inexpensive oil, a critical resource for the island nation’s energy needs, while Cuba reciprocated by providing extensive medical assistance within the Venezuelan healthcare system. This exchange was not merely transactional but emblematic of the ideological and political solidarity between the two governments, particularly under the leadership of Hugo Chávez and Fidel Castro. The Venezuelan oil subsidies allowed Cuba to mitigate its chronic energy shortages and maintain essential industries, while Cuban doctors were deployed across Venezuela, especially to underserved and impoverished areas, enhancing healthcare access and strengthening social programs. By 2015, Cuba had established itself as a global leader in medical human resources, ranking third worldwide in the number of physicians per capita, a distinction surpassed only by Monaco and Qatar. This remarkable density of medical professionals was a direct outcome of Cuba’s long-standing emphasis on medical education and healthcare as pillars of its social policy. The country’s medical workforce was not confined to domestic service; rather, tens of thousands of Cuban doctors were dispatched internationally, serving in dozens of countries as part of humanitarian aid initiatives and diplomatic outreach. These medical missions fulfilled dual purposes: they provided critical healthcare services to populations in need and helped Cuba secure favorable trade terms and political alliances, often in exchange for goods, services, or financial support. The economic significance of Venezuela’s support to Cuba was profound. Carmelo Mesa-Lago, a Cuban-born economist based in the United States, highlighted that the Venezuelan subsidy in nominal terms exceeded the support Cuba had previously received from the Soviet Union during the Cold War. Specifically, Cuba received cheap oil from Venezuela valued at approximately $6 billion annually, a figure that underscored the scale of this subsidy relative to Cuba’s overall economy. This level of support was instrumental in sustaining Cuba’s energy-dependent sectors and social programs, effectively replacing the Soviet-era subsidies that had collapsed with the dissolution of the USSR in the early 1990s. The Venezuelan oil subsidy thus became a cornerstone of Cuba’s economic survival and development strategy in the 21st century. Mesa-Lago further emphasized the critical nature of Venezuelan assistance in 2013, warning that the cessation of such support would have catastrophic consequences for Cuba’s industrial and transportation sectors. He noted that without Venezuelan oil subsidies, essential services such as electricity generation, sugar mills, and other vital industries would face paralysis. This assessment reflected the deep structural dependence Cuba had developed on the continuous flow of subsidized energy supplies, which were integral to maintaining both economic activity and social stability. The interdependence between energy inputs and industrial output was so pronounced that any disruption in the oil supply chain threatened to undermine Cuba’s broader economic framework. From an economic standpoint, the relationship between Cuba and Venezuela was markedly asymmetrical. By 2012, Venezuela’s contribution to Cuba’s gross domestic product (GDP) was substantial, accounting for 20.8%, whereas Cuba’s economic impact on Venezuela was relatively minor, representing only about 4% of Venezuela’s GDP. This disparity highlighted Cuba’s heavy reliance on Venezuelan resources, particularly oil, and underscored the vulnerability of the Cuban economy to fluctuations in Venezuela’s economic health and political stability. The dependency was not merely a factor of trade volume but also reflected the structural integration of Venezuelan subsidies into Cuba’s economic planning and social policy implementation. The fragility of this dependence became evident during Venezuela’s economic crisis in 2016, which was characterized by hyperinflation approaching 800% and a severe contraction of its GDP by 19%. The crisis severely constrained Venezuela’s ability to maintain its generous subsidies to Cuba, resulting in Cuba not receiving the full amount of subsidized oil and corresponding payments. This shortfall had immediate repercussions for Cuba’s energy availability and economic operations, forcing the government to implement austerity measures and seek alternative sources of revenue and energy. The crisis exposed the risks inherent in Cuba’s reliance on a single partner for critical economic inputs and underscored the need for diversification of economic relationships. Further compounding these challenges, plans for additional budget cuts to Cuba’s subsidies and oil supplies were announced for 2018, marking the third consecutive year of reductions in Venezuelan support. These ongoing decreases reflected the sustained economic difficulties faced by Venezuela and the consequent recalibration of its foreign aid commitments. Although specific updates beyond 2018 are necessary to fully understand the current state of this relationship, the trend of diminishing Venezuelan subsidies during this period illustrated the increasing strain on Cuba’s economy and the urgency of adapting to a new economic reality with less external support. The gradual withdrawal of Venezuelan subsidies necessitated significant adjustments within Cuba’s economic policies and international partnerships to mitigate the impact of reduced energy supplies and financial assistance.

In 2009, Cuba’s total government revenues were reported at approximately $47.08 billion, while expenditures exceeded this amount, reaching $50.34 billion. This fiscal imbalance indicated a budget deficit for the year, reflecting the government’s challenges in aligning income with public spending. The Cuban economy at the time was characterized by substantial government involvement, which was evident in the scale of public expenditures relative to the size of the economy. The country’s public debt was calculated to be 34.6% of its Gross Domestic Product (GDP), a figure that highlighted the level of financial obligations the government carried relative to its overall economic output. This ratio of public debt to GDP was a significant indicator of fiscal health, suggesting moderate indebtedness in comparison to many other nations. Cuba maintained an account balance of $513 million, which represented the net difference between the country’s total exports and imports of goods and services, as well as net earnings from abroad. This positive account balance suggested that Cuba was able to generate a surplus in its current account, contributing to the stability of its external financial position. In addition to this, the nation held reserves of foreign exchange and gold totaling $4.647 billion. These reserves served as a buffer to support the national currency, facilitate international trade, and provide financial security in times of economic uncertainty. The accumulation of such reserves was particularly important for Cuba given its vulnerability to external economic shocks and the impact of longstanding trade embargoes. Government spending in Cuba accounted for approximately 67% of the country’s GDP, underscoring the dominant role of the public sector in the national economy. This high level of government expenditure reflected the socialist orientation of the Cuban economic model, where the state controlled the majority of productive resources and provided extensive social services, including healthcare, education, and social security. The prominence of government spending was a key feature of the Cuban economy, influencing the allocation of resources and the structure of economic activities throughout the country. Public debt, meanwhile, represented around 35% of the domestic economy, reinforcing the notion that the government relied significantly on borrowing to finance its operations and investments. Despite the implementation of various economic reforms aimed at increasing efficiency and encouraging private enterprise, the Cuban government continued to exert substantial influence over the economy. These reforms, initiated in the early 2000s and evolving through the decade, sought to introduce elements of market mechanisms and reduce state control in certain sectors. However, the state remained the primary economic actor, controlling major industries, regulating prices, and directing investment. This persistent government dominance was reflective of Cuba’s commitment to its socialist principles, even as it navigated the pressures of globalization and internal economic challenges. The tax system in Cuba featured a highest individual income tax rate of 50%, which applied to the top earners within the country. This progressive tax rate was designed to redistribute income and support the financing of public services and social programs. On the corporate side, the top tax rate was set at 30%, applicable to domestic companies operating within the Cuban economy. However, wholly foreign-owned companies faced a higher corporate tax rate of 35%, reflecting the government’s approach to foreign investment by imposing additional fiscal obligations on external entities. This differentiation in tax rates was part of a broader policy framework aimed at balancing the attraction of foreign capital with the protection of national economic interests. In addition to income and corporate taxes, Cuba imposed other forms of taxation, including a tax on property transfers and a sales tax. The tax on property transfers targeted the sale and acquisition of real estate, serving as a source of revenue and a mechanism to regulate the property market. The sales tax, levied on the consumption of goods and services, contributed to government revenues by taxing final purchases, thereby broadening the tax base beyond income and corporate profits. Together, these taxes formed an integral part of Cuba’s fiscal system, supporting the financing of public expenditures and the maintenance of social programs. Overall, the total tax burden in Cuba was estimated to be 24.42% of GDP. This figure represented the proportion of the national economy that was collected by the government through various forms of taxation. While this tax burden was substantial, it was consistent with the extensive role of the state in the Cuban economy and the need to fund a wide array of public services and social welfare initiatives. The combination of direct and indirect taxes reflected the government’s strategy to mobilize resources from both individuals and businesses, as well as from consumption activities, to sustain its economic and social objectives.

During the 19th century, Cuba’s income distribution was considered relatively favorable when compared to other Latin American countries. Unlike many of its regional counterparts, which were characterized by extreme disparities in wealth and widespread poverty, Cuba exhibited a somewhat more balanced distribution of income, particularly in the context of the plantation economy that dominated the island. This relative equality was largely a function of the economic structure centered on sugar production, which, while highly exploitative, generated significant wealth that was distributed among a broader segment of the population than in some neighboring countries. However, this apparent comparative advantage in income distribution did not imply the absence of significant social stratification or economic challenges. Despite these observations, scholars such as Susan Eckstein have urged caution in interpreting the available data from this period. Eckstein notes that the statistical records and economic reports from the 19th century often provide only a rough approximation of the actual conditions prevailing in Cuba. The limitations of data collection methods, the biases inherent in colonial and post-colonial record-keeping, and the lack of comprehensive demographic and economic surveys mean that any conclusions drawn about income distribution must be qualified. Consequently, while Cuba’s income distribution may have appeared more equitable on paper, the reality on the ground was likely more complex and nuanced, with significant disparities masked by incomplete or imprecise data. One of the most pronounced forms of inequality during this period was the stark contrast between urban and rural areas. Urban centers such as Havana experienced higher standards of living, better access to public services, and more diversified economic opportunities. In contrast, rural areas, which were largely dependent on agriculture and plantation labor, suffered from lower incomes, poorer living conditions, and limited access to education and healthcare. This urban-rural divide created a socio-economic landscape marked by significant disparities in wealth and quality of life. The concentration of wealth and infrastructure in cities contributed to social tensions and underscored the uneven development that characterized much of Cuba’s economy during the 19th century. Racial inequalities further compounded these social divides, particularly between the white population and the Black population, many of whom were descendants of enslaved Africans or were themselves enslaved until abolition in 1886. The legacy of slavery and racial discrimination entrenched systemic disadvantages for Black Cubans, who faced limited economic opportunities, restricted social mobility, and widespread exclusion from political and economic power. White Cubans, who dominated land ownership, commerce, and political institutions, maintained a privileged status that perpetuated racial hierarchies. These inequalities were reflected not only in income and wealth but also in access to education, healthcare, and legal rights, thereby reinforcing a racially stratified society. In addition to these social and racial disparities, Cuba confronted several economic challenges that hindered equitable development. The island’s economy was heavily dependent on sugar exports, making it vulnerable to fluctuations in global commodity prices and trade disruptions. Trade issues, including tariffs and restrictions imposed by foreign powers, particularly the United States, affected Cuba’s ability to diversify its economy and achieve sustainable growth. Furthermore, high unemployment rates, especially among rural laborers and marginalized populations, exacerbated economic insecurity and social unrest. These challenges underscored the fragility of Cuba’s economic model and highlighted the need for structural reforms to address persistent inequalities and promote broader economic inclusion. By the early 21st century, Cuba’s socio-economic landscape had undergone significant transformations, yet challenges related to income and wealth distribution persisted. In 2021, Cuba was ranked 83rd out of 191 countries on the United Nations Human Development Index (HDI), placing it within the category of countries with high human development. This ranking reflected notable achievements in areas such as education, healthcare, and life expectancy, which contributed to improved standards of living for many Cubans. The HDI score indicated progress in human development indicators, despite ongoing economic difficulties and resource constraints. Cuba’s position on the HDI highlighted the complex interplay between social policies aimed at reducing inequalities and the structural economic challenges that continued to shape income and wealth distribution within the country.